Wesdome Gold Mines Ltd.

Thanks, Daniel, and good morning to everyone. Thanks for us.

Before we begin, we'd like to take this opportunity to remind 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 analysis dated May 11, 2022. Those 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. The slides used for this presentation and the recording of this call will be posted on the Company's website.

And with that, it's over to Lindsay Dunlop, Vice President of Investor Relations.

Thanks, Heather. Speaking on the call today will be Duncan Middlemiss, CEO; Scott Gilbert, CFO; and Mike Michaud, VP, Exploration.

Also on the call today is Raj Gill, VP, Corporate Development. Duncan will lead us off today with an operations update and then Scott will start with the financial results.

Mike will follow with an exploration update of both Eagle River and Kiena. And finally, a conclusion and outlook summary from Duncan.

We will then open the line up for the Q&A session. Please go ahead, Duncan.

Thanks, Lindsay. Good morning.

First quarter combined production was 25,611 ounces. Essentially in line with our budget of lower production in the first half of the year and significantly higher in the second half.

Eagle ounces, we're on track and head grades started trending higher at the end of the quarter due to spoke sequencing. Mike will give some additional details on how the Falcon zone development and exploration work is going later in the call, but I can say is positive.

The shortfall in this quarter's production was Kiena. There were a few reasons for this.

In January, where we had very poor mobile speed performance. Specifically the scoop tram is persistent throughout the quarter.

The school fleet at that point was entirely rented. By the end of the quarter, we had received our own 2, 3.5 yard and two six yard scoop tram.

These are all currently in service and working as expected to rely on. In May, the mine also received two jumbles which will be working shortly underground.

In terms of the mobile fleet we are in good shape. All of the received equipment was delayed from the original delivery dates due to supply chain issues.

Workforce availability was also impacted in the quarter with high numbers of people affected by the pandemic as the Val d'Or area suffered a fairly intense outbreak. This has lessened significantly however, we are maintaining our vigilance at both operations.

In February, we got a significant underground Crusher failure in which repair time was lengthened again through the supply chain issue. The crusher has been repaired and is working as expected.

All of these items significantly impacted our production plant in Kiena. Moving into April, we had our most productive development month as the workforce is in place and the new mobile fleet is working well and this continues into May.

Despite the challenges in the quarter, we generated $9 million in cash margin at Kiena despite the cash costs of $1,364 per ounce of gold sold. The paste fill plant a critical component of Kiena project has fallen slightly behind schedule.

Originally planned for completion in June, it is looking more like August now as we have a key component that has been delayed which ultimately pushes our plant commissioning back. We're anticipating having the plant fully functional in the third quarter.

Subsequent to quarter end, I'm very pleased to report that we have hired a new Chief Operating Officer, Frederic Mercier-Langevin who starts in June. Frederic comes from Agnico Eagle where he was most recently the General Manager of Meliadine mine.

He also oversaw the Goldex mine as General Manager in the Lapa mine both located in Val d'Or. His experience especially at mine similar to Eagle and Kiena will be valuable and will be very valuable as we ramp up Kiena and continue to optimize Eagle.

And on behalf of our employees and the Board of Directors, I would like to welcome him into the team. Now I will pass this over to Scott for review of the financials.

Thanks, Duncan. In Q1 2022, Wesdome generated $66.6 million of gold revenue from the sale of 28,000 ounces, which includes 9200 pre commercial Kiena ounces.

The operating cash flow was $29.9 million. The total capital spent was 34.6 million, of which 29 million was growth capital.

The ending cash balance was $52.5 million. Despite inflationary pressure and pandemic related impacts, the overall aggregate cash cost at Eagle River remained consistent with Q1 in 2021.

Eagle River cash cost per ounce sold increased by 10% to 1262, compared to Q1 due to the lower ounces sold. So, as expected combined total cash costs of 1295 per ounce and all in sustaining costs of 1595 per ounce were higher than our full year guidance as a result of expected lower production.

Now, over to you, Mike.

Thanks, Scott. On the exploration side, it's been a great start to the year.

Drill productivity is up over last year and improving. As you know, we have another aggressive year of exploration planned on both sites.

Firstly at Eagle River, where we have six underground and two surface drills operating. The Falcon seven zone has provided exciting results.

Initial underground development has confirmed the high gold grades and good continuity of the zone, which is very important given that this zone will play an integral role in production for the second half of the year and beyond. This zone not only provides additional high rating, but it's located away from other mining areas near the bottom of the ramping system.

We're also pleased with the ongoing definition and expansion drilling in Falcon center zone that has increased our confidence of the gold grade distribution. These results which have been recently released, continue to show the high grade nature of this zone, including 90 grams per ton unpack over 4.9 meter and 87 grams per ton over 6.6 meters.

Of significance, the ongoing drilling has also identified a number of thicker sections of zone, mostly related to deletional jobs, as well as splayed and full doses and limbs that have the potential add significantly to the existing nearby and resource space. What makes the discovery in the mining of the Falcon zone so exciting is that historically pulled at the Eagle River Mine has been hosted in the mind diary.

However, the Falcon seven zone is hosted in volcanic rocks west of the diary. Hence this discovery highlights the prospectivity of the volcanic rocks beyond the existing footprint of the Eagle River mine.

The image of VG in mock sample that you see in the slide is for recent development in this area. As part of testing these volcanics a 400-meter-long drift is being established on the 355-meter level to provide platforms to test a number of targets.

First, the drill off the upper 300 meters of the Falcon seven zone. Second to test the mineralization further along strike up the seven zone in the volcanic rocks.

And third to test for parallel zones where surface exploration has already returned encouraging results. This is a region of the mine has historically been given very little attention.

It's a similar situation at Kiena were 700 underground drills and one surface drill since expanded to our operating. Of course, the focus of our drilling remains proximal to high grade A zone and expanding the mineralization down plunge.

However, we're also now testing the lateral extension of the A zone along the four limbs. Additionally, we're exploring the footwall zone, both down plunge and laterally.

All of these zones have potential to add ounces to the resource base and remain a priority for the drilling. As well two drills are operated on 33 level to test historic zones further to the Southeast along straight from the Kiena mine, particularly at the and Wish zones were previous drilling has returned good results and remain under explored and open along strike and adept.

Surface drilling is ongoing and will be accelerated again this summer once the ice has melted. The drilling has been focused on the Shocky zone, and the recently discovered for go zone were encouraging results are returned in late 2021.

As well our understanding of the geology in this area continues to improve with additional drilling and highlights the prospectivity of this region. We expect to release drilling results in the very near future and have a regular flow of news over the course of the year.

Over to you Duncan.

Thanks Mike. As expected cash and all in sustaining costs this quarter were higher than guidance due to planned lower production levels.

Higher production levels we are planning for the second half of the year, with Q2 production being higher in Q1 at both assets. Material offset in production begins in the third quarter.

Consequently, both cash and all in sustaining costs will decrease significantly in the second half of this year. At this point we are trending towards ending the year on the lower end of guidance range and the higher side of the cost range as a result of the delays in Kiena.

We have worked through many of the same issues faced by our peers with the pandemic affecting workforce availability, supply chain issues, and a tight labor market based on where the world is, and it's very fortunate that we started our Kiena project when we did in June of 2021, as we were able to purchase and receive much of our key equipment required for the build out of Kiena. Eagle River operations are much less impacted by the supply chain issues and will deliver within guidance as the vulnerability of existing operations is much less.

This is also our final year of elevated growth CapEx spending. We will spend approximately $80 million this year as we complete the final projects related to the Kiena ramp up mainly the paste fill plant, water treatment plant and tailings dam augmentation.

Despite the higher spending and one quarter delay in Kiena, we expect to return to positive free cash flow status in the second half of the year. As a result of improved development Kiena with our new equipment, drilling activities are also going very well.

And we expect to deliver an update of our exploration progress from Kiena in the near-term. I'm especially excited about our new platform to optimally explore the Footwall zone.

Footwall zone was not contemplated in the prefeasibility study. At Eagle we're also very excited about the near to medium term as we continue our exploration efforts both inside and outside of mine diary.

The short-term challenge at Eagle is to match the mine production with the mill production. We have been making progress on this front with the commissioning of our new underground booster fan installation, which has allowed us to increase our capacity for material handling and this will allow us to begin to close the gap.

I will now open up the lines for questions.

Thanks, operator, thanks for taking my question, Duncan. Two of them please.

One on Eagle and one on Kiena please. Just wondering, when we think about the Falcon zone and the company's target of 100,000 ounces a year what do you think -- what's your current thinking on the ideal mining rate coming out of Falcon to maintain that production level?

It's really a higher grade lower volume zone. So I think really, the mining rates in terms of times would be probably in around, I'd say 300 generally.

But the ounce contribution from Falcon is going to be half year and then that would recommend. I think that when you look at our reserves at Eagle, we really do have some very high grade reserves and some kind of medium grade reserves, right?

And so when you're in Falcon, you definitely feel that effective. It's something like that 303 zone that we had previously within the diary.

So yes, I would think it'd be 300 to 350 range, we're really just getting out there to fully develop it now and understand and it again. I sort of look at this year as a year of establishing proper drill platforms in order to really fully explore what we have.

And that's exactly what's going on at Eagle right now. We've got drift higher up in the mine and 355 and we're looking at the upper part of a Falcon with that drill Platform.

Okay. Yes, that's very helpful.

Switching to Kiena, it looks like things are getting back on track. Are there any areas of reconciliation that are not meeting expectations and thinking about sort of some of the April numbers and the main numbers so far?

I see it's really right now, relative because of where we are in terms of our productivity rig now, we're getting the development process on track with the new equipment and actually having our own people at the phase which is great. So I would say there's really no news on that front and we're not expecting any big surprises I don't think.

And I guess Duncan, first off, I just like to welcome Frederic to the team and back to Val d'or too. So congratulations on that.

So at any rate, I saw that the Eagle cost the AISC was higher than Kiena. We would have hoped maybe Eagle provides some offset to the volatility at Kiena, there was a COVID outbreak in Val d'or on plant Crusher maintenance and so on.

So but with this, and given that you noted that Eagle is on track to hit guidance, should we expect a pretty quick rebound with cost going lower at Eagle and what were the drivers of those elevated costs in Q1 at Eagle specifically.

Actually Don, I will tell you Eagle, really, by budget, it was just a little quarter and Eagle actually performed very well at breaking within what the plan costs were. So no, Eagle very -- I'm very comfortable with our jack at Eagle I think, the costs are in line, the production is set up well for the remaining nine months of the year.

So I would expect us to fully be within guidance -- the midpoint of guidance on Eagle in terms of production and also our cost expectations.

Okay. So I guess the one at Eagle was -- the high costs are really just related to the low production base.

But it wasn't –

It stoops the , Don really just sort of touched my last question. But really, the Eagle reserves to what we see.

I mean, Falcon is a really, sort of chunky piece of the reserves. So when you're in Falcon, or like the 303, it's certainly, you really feel it right in terms of the ounce production.

And we have other good grades, material all around, but it's really a function of stoops sequence and, really, that kind of affects that. So a few things that are -- we're driving towards, and I alluded to it at the end of my commentary, and since really the -- we got this new booster fan installation in the mine.

And we've actually increased our available ventilation, we're able to add another truck. It's really kind of a big deal for us because for every, ton of ore that we take that we have to take another ton of waste, right being in the environment.

So we're quite excited about that. We haven't quite seen the full impact of that.

But I think that as we move forward with that new capability, I think that Eagle is going to hopefully close the gap into notching the mill and the mind together.

Okay, that's good. And one question on Kiena.

So we see that, the equipment's in place. That's encouraging.

And the next milestone that we look forward to is to have the paste backfill plant up and running. Can you just confirm that your expected timing for that paste backfill plant?

And also, does it involve a little bit of a ramp up or as soon as you have it up? Is it pretty much -- should we -- expect a step change in production at that point, step change in mining?

Yes, definitely. I mean, let's face it, the availability of paste fill is going to be such a benefit to the mine in terms of our cycle times on stoops.

So really, what we're seeing is, there's one component which has been delayed, it’s the MCC, which is the motor control center. So really, the item for that, and we do expect delivery early in August.

We're going to install it, but the commissioning is the plan. You're correct.

I mean, that is something which is, going to take a period of a couple of weeks for sure, maybe a month, who knows. The underground distribution facilities are all in place, essentially.

So I think we're in good shape on that one. So really, the critical path, I think is the installation of the MCC, the motor control center.

And that's where you're able to automate the process, right.

Okay, great. Well, good luck rebounding in the next quarters and as the Kiena CapEx starts to ease and free cash flow increases.

Thank you.

Just one for me on Kiena, kind of a two-parter. Just wondering if commercial production Kiena is now expected to be pushed back until after the commissioning of the paste fill plant.

And also wondering how this is going to impact the cost profile Kiena in Q2?

Yes. I think really -- I said at the quarter two, Michael, it's really the paste fill plant commissioning is a key event for declaring commercial production Kiena.

So, yes, definitely, I think it would be after we have that plant to fully commissioned. In terms of really what we have for costs, it's definitely going to be increasing after that, because volumes will be increasing in Kiena.

So, I think that that's the guidance I would give you right now that we're definitely expecting, far better cost than what we've seen in the first word.

Okay. Fantastic.

Thank you.

Just Kiena, if you could maybe just give us an update on the CapEx remaining there and how susceptible that is to inflation going forward?

All right. I'll let Scott answer that our Chief Financial Officer.

Yes. Ryan in Q1, we spent about $29 million on the growth capital.

We're going to be about 62 for the first half of the year, and then it's going to trail off down to about another 30 million, 40 million in the second half of the year.

So sorry, I kind of cut out there in Q2. Could you repeat that, please?

Sorry. For the first half of the year, we're going to be roughly about 62 million and the second half of the year about 40 million.

Great, thank you. And I mean, is that, again, are those numbers kind of firm or are they susceptible to a bit of inflation during that time?

We actually just completed forecast. And these are our most up to date numbers.

Okay, great. And probably other ones have been answered.

But I'm wondering if you could just kind of quantify the COVID impact on the workforce, was it Q1, was 30 guys out sick? And now we're down to 12 or 15?

Could you maybe just kind of give us some numbers there?

Yes, absolutely. So really, the outbreak was pretty severe, I would say sort of mid-January into February.

We actually had, when I talked about employees and contractors. We had about 150 people affected, either they were directly infected, or they were in contact with others.

So it was a little difficult to juggle the manpower at that point. But we're beyond that now.

And hopefully, we can stay out of the COVID family box. But we maintain our rigor, I would say in terms of our protocols and what we do for COVID prevention at both mines.

And unfortunately, this is just a lot more transmissible strain, and everybody's really, really getting it. We didn't actually have a case of COVID at either one of the sites until the end of December of 2021.

So we had really performed well, and then all of a sudden Omicron kind of hit.

Yes. No, that is a good track record.

That's unfortunate. So the 150, what would that represent of the total workforce on a percentage basis?

Well, with contractors included, I mean, it's sort of variable, but we're probably running around 400, 450. So almost 1/3rd of the contingent I would say would have been affected over a period of time.

All right. What are the kind of the -- I guess active cases now are down to it more manageable level now?

Yes. I think we've got four active cases right now in Kiena, probably similar at Eagle.

Eagle sort of suffered the same owes maybe not to that degree, but bit of challenge that we're working through it.