Western Goldfields Announces Fuel Hedging Program, Status of Issuer Bid and Revisions to Credit Facility Terms
December 18 2008 - 3:52PM
PR Newswire (US)
TORONTO, Dec. 18 /PRNewswire-FirstCall/ -- Western Goldfields Inc.
("Western Goldfields" or the "Company") (TSX:WGI, NYSE
Alternext:WGW) is pleased to provide an update on the Company's
recent entry into a fuel hedging program, its issuer bid announced
in November and revisions to the terms of its credit facility as a
result of the new mine plan announced in September 2008. - Entered
into a diesel fuel hedging program for approximately 25% of the
Mesquite Mine's diesel requirements for each of the next two years.
- Repurchased 2.3 million shares at an average price of C$1.36
through December 18, 2008 under the terms of its normal course
issuer bid initiated November 7, 2008. - Revised the terms of its
credit facility including: approval of the new mine plan, timing of
completion test and debt repayment schedule. Fuel Hedging
------------ With the recent decline in diesel prices, Western
Goldfields has entered into hedging contracts for approximately 25%
of Mesquite's annual diesel consumption for each of the next two
years. The Company purchased 1,512,000 gallons of diesel per year
at forward prices of $1.82 and $2.00 per gallon in 2009 and 2010,
respectively. During 2009 the Company expects Mesquite to consume
approximately 5.8 million gallons of diesel fuel. In addition to
the hedge price, Western Goldfields pays approximately $0.15 per
gallon of additional costs when including taxes and delivery
charges. The hedge prices are materially lower than the Company's
plan which incorporated budgeted diesel costs of $2.40 in 2009 and
$2.75 per gallon thereafter including taxes and delivery charges.
Approximately 20% of Mesquite's operating costs are attributable to
diesel consumption. Normal Course Issuer Bid
------------------------ Through December 18, 2008, Western
Goldfields has repurchased 2.3 million shares at an average price
of C$1.36 per share. The repurchases made by the Company represent
approximately 18% of the total allowable under the rules of the
issuer bid since the bid commenced on November 7, 2008. The Company
has expended a total of C$3.1 million repurchasing shares. Going
forward, Western Goldfields will continue to monitor market
conditions and repurchase shares in a manner that aims to maximize
shareholder value. As a result of the repurchases, Western
Goldfields has 134,526,286 basic shares outstanding as of December
18, 2008. Credit Facility --------------- On December 17, 2008 the
syndicate of banks for Western Goldfields' credit facility approved
the Company's new mine plan and amended certain terms of the credit
facility. As Mesquite is estimated to generate greater cash flow
over the coming years under the new mine plan, the repayment period
of the facility was accelerated by two years allowing Western
Goldfields to fully repay its debt by December 2012. At September
30, 2008 Western Goldfields had $45.4 million of cash, including
$7.5 million of restricted cash, and $86.3 million of debt
outstanding. As a result of the transition into the new mine plan,
the date to finish completion testing was moved to June 30, 2009
and, as such, the Company plans to conduct the completion testing
in the early part of the new year. Upon successful completion, the
interest rate on the facility will be reduced to LIBOR plus 1.75%
from the current rate of LIBOR plus 2.20%. Under the revised
repayment schedule of the credit facility, the principal payment
due at the end of 2008 will be $17.7 million with an additional
$4.7 million and $6.9 million due at the end of June and December
2009, respectively. The remaining balance will be paid in 2010 and
beyond. In addition to the annual minimum principal payment, there
is a cash sweep mechanism included in the credit facility that
requires increased repayments above the semi-annual principal
payment based on Mesquite's cash flow generation. In addition, as
part of entering into the fuel hedging program, the Company is
working with the representatives of the syndicate banks to make the
necessary amendments to the credit facility to secure the fuel
hedges with the equivalent collateral that secures the Company's
credit facility. The Company is currently amending the security
documents and expects this to be completed by the end of the year.
Western Goldfields Inc. ----------------------- Western Goldfields
Inc. is a gold production and exploration company with a focus on
precious metal mining opportunities in North America. The Mesquite
Mine, currently the Company's sole asset, was brought into
production in January 2008, and the Company's focus is now on
achieving the anticipated rate of production and completing planned
improvements to the property. The Company has 2.8 million ounces in
Proven and Probable Reserves as outlined in more detail in its
latest annual report on Form 10K filed on http://www.sedar.com/.
Western Goldfields common shares trade on the Toronto Stock
Exchange under the symbol WGI, and on the NYSE Alternext under the
symbol WGW. For further details, please visit
http://www.westerngoldfields.com/. Mr. Wes Hanson, P.Geo., Vice
President of Mine Development, Western Goldfields Inc., is the
qualified person under National Instrument 43-101 who supervised
the preparation of the technical information contained in this news
release. Mr. Hanson is an officer of the Company. This news release
shall not constitute an offer to sell or the solicitation of an
offer to buy the shares in any jurisdiction. Forward-Looking
Information --------------------------- Certain statements
contained in this news release and subsequent oral statements made
by and on behalf of the Company may contain forward-looking
information within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and similar Canadian
legislation. Such forward-looking statements are identified by
words such as "intends", "anticipates", "believes", "expects",
"plans" and "hopes" and include, without limitation, statements
regarding the Company's plan of business operations, production and
cost estimates, potential contractual arrangements, receipt of
working capital, anticipated revenues, and capital and operating
expenditures. These forward-looking statements are based on the
best estimates of management at the time such statements are made.
There can be no assurance that such statements will prove to be
accurate; actual results and future events could differ materially
from such statements. Factors that could cause actual results to
differ materially include, among others, those set forth in the
Company's Annual Report on Form 10-KSB for the year ended December
31, 2007 filed with the U.S. Securities and Exchange Commission and
the Ontario Securities Commission, under the caption, "Risk
Factors". Most of these factors are outside the control of the
Company. Investors are cautioned not to put undue reliance on
forward-looking statements. Except as otherwise required by
applicable securities statutes or regulation, the Company disclaims
any intent or obligation to update publicly these forward-looking
statements, whether as a result of new information, future events
or otherwise. DATASOURCE: Western Goldfields Inc. CONTACT: please
visit http://www.westerngoldfields.com/, or contact: Raymond
Threlkeld, President and CEO, (416) 324-6005, ; Brian Penny, Chief
Financial Officer, (416) 324-6002, ; Hannes Portmann, Director,
Corporate Development and Investor Relations, (416) 324-6014,
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