What Wesdome Gold Mines (WDO) Said on Its Q3 Earnings Call

Key Points

• Wesdome reaffirmed its 2026 production guidance despite Q3 output of nearly 41,300 ounces coming in below expectations. Management expects production below the guidance midpoint and costs near the upper end, relying on higher grades and improved execution in Q4.
• Higher gold prices lifted Q3 revenue to CAD 251 million and net income to CAD 90 million, but lower sales volumes pushed all-in sustaining costs up 26% year over year to CAD 1,789 per ounce. The company has generated nearly CAD 220 million in free cash flow through nine months and expects to exceed its prior-year record if Q4 is strong.
• Wesdome ended September with CAD 380 million in cash and no debt, but has paused its share buyback while it sets 2027 spending priorities. Management expects higher growth capital spending next year, alongside ongoing mine ramp-ups and exploration.

Wesdome Gold Mines TSE: WDO reaffirmed its 2026 production guidance after third-quarter output fell short of expectations, with management counting on higher-grade mining and improved productivity to make the fourth quarter its strongest of the year.

The company expects production to finish below the midpoint of its 180,000 to 205,000-ounce guidance range and all-in sustaining costs to land near the upper end of guidance. Wesdome produced nearly 41,300 ounces in the third quarter and approximately 130,000 ounces in the first nine months of the year.

President and CEO Anthea Bath said lower-than-expected grades at one Eagle River stope and an incompletely mined sill reduced output. At Kiena, workforce planning gaps curtailed equipment utilization and delayed the mining sequence, pushing two high-grade Kiena Deep stopes into the fourth quarter.

“Our immediate priority is strong execution,” Bath said, adding that higher-grade inventory and operating progress early in the fourth quarter supported the company’s outlook.

Higher gold prices lift earnings, but costs rise

Third-quarter revenue was CAD 251 million, net income was CAD 90 million, or CAD 0.62 per share, and EBITDA was CAD 157 million, Chief Financial Officer Phil Yee said. All three measures increased from a year earlier, primarily because of a 23% rise in the average gold price, partly offset by a 12% decline in ounces sold.

Operating cash flow was CAD 102 million and free cash flow was CAD 52 million, or CAD 0.36 per share. Both were lower than a year earlier. Yee attributed the free cash flow decline to factors associated with lower production, including lower operating cash flow, higher mine exploration and development costs, and higher sustaining capital at Eagle River.

Wesdome generated nearly CAD 220 million in free cash flow through the first nine months and expects the full-year figure to exceed its prior-year record of CAD 278 million, assuming a strong fourth quarter.

Consolidated all-in sustaining costs rose 26% year over year to CAD 1,789 per ounce sold, mainly because of lower sales volumes. Yee said higher production and sales, along with supply-chain initiatives, should bring costs per ounce down in the fourth quarter.

Looking ahead, Yee said labor is Wesdome’s largest potential source of inflationary pressure for 2027. He described the company’s prior three-year cost outlook as a starting point, but said inflation and exchange rates could affect the result. Applying an illustrative 5% inflation rate to this year’s guidance midpoint would put costs at roughly CAD 1,730 to CAD 1,750 per ounce, he said.

Mine ramp-ups remain central to fourth-quarter outlook

Eagle River produced nearly 25,000 ounces in the third quarter, up from approximately 22,000 ounces in the second. The mine processed a record nearly 80,000 tons, while average grade was 10.1 grams per ton. Chief Operating Officer Tyler Mitchelson said the lower-grade stope was an anomaly and that other stopes were reconciling with expectations.

Management expects both grade and tonnage to rise at Eagle River in the fourth quarter. During the question-and-answer session, Bath said the company was targeting a double-digit grade at the mine next year, above the 8.8 grams per ton cited by an analyst in a question about the technical report.

At Kiena, production exceeded 16,000 ounces in the third quarter. Seasonal workforce availability reduced equipment and operator availability, while a planned shutdown extended into unplanned downtime, Mitchelson said. The delayed Kiena Deep stopes and a greater share of lower-grade ore from Presqu’île reduced the average feed grade to 8.2 grams per ton from 11.1 grams in the second quarter.

Staffing and stope availability have since improved, Mitchelson said. Presqu’île, which ramped up to more than 250 tons per day during the third quarter, is now expected to reach commercial production in the first quarter of 2027. Mitchelson estimated it could contribute 110,000 to 130,000 tons during 2027.

Buyback paused as company weighs growth spending

Wesdome ended September with CAD 380 million in cash, no debt and CAD 735 million in available liquidity. During the quarter, it returned approximately CAD 50 million to shareholders, including CAD 46 million in share repurchases and CAD 4.4 million in dividends.

The Toronto Stock Exchange approved renewal of a buyback program allowing Wesdome to repurchase up to approximately 7.2 million shares over 12 months. Yee said the program is currently paused while the company develops its 2027 budget and assesses spending priorities. Management would also consider a dividend increase if an opportunity arises, he said.

Year-to-date capital spending was CAD 132 million, with a significant increase expected in the fourth quarter. Wesdome expects full-year spending to meet its CAD 205 million guidance and anticipates higher growth capital spending in 2027.

Exploration results point to longer-term opportunities

Wesdome is drilling near both mines to expand its resource base and assess potential bulk-tonnage projects. At Eagle River, exploration chief Jono Lawrence highlighted high-grade intersections outside the current resource model, as well as work at Mishi and Magnacon. Bath said a conceptual study on the Mishi and Magnacon opportunity is planned for next year.

At Kiena, Lawrence cited a Norbenite Footwall drill intersection of 7.8 grams per ton over 57.2 meters and a Shawkey 10 intersection of 3.1 grams per ton over 106.5 meters. He said further drilling is needed to establish the continuity and scale of the mineralization.

Wesdome plans to release its 2026 year-end results and 2027 guidance on February 24, with its next mineral reserve and resource update expected in the first half of 2027.

About Wesdome Gold Mines (TSE:WDO)

Wesdome is a Canadian-focused gold producer with two high-grade underground assets, Eagle River in Northern Ontario and Kiena in Val-d'Or, Québec. The Company's primary goal is to responsibly leverage its operating platform and high-quality brownfield and greenfield exploration pipeline to build a value-driven mid-tier gold producer.

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