TORONTO, April 30 /PRNewswire-FirstCall/ -- Western Goldfields Inc. ("Western Goldfields" or the "Company") (TSX:WGI, NYSE Amex:WGW) today announces financial results for the three-month period ended March 31, 2009. The Company continued to focus on further enhancing its operational efficiency and met its production guidance at lower cost of sales per ounce(1) in the first quarter. All amounts are expressed in United States dollars unless otherwise indicated. - Cash flow from operations of $8.9 million during the quarter - Cash at March 31, 2009 of $26.6 million, including $7.5 million of restricted cash, an increase of $7.8 million during the quarter - Gold production for the first quarter of 33,660 ounces - Gold sales of 32,715 at an average realized price(2) of $867 per ounce - Cost of sales per ounce(1) for the quarter of $573 - Net loss of $5.3 million, or $0.04 per share, for the first quarter of 2009, compared to a net loss of $19.6 million or $0.14 per share in 2008. The net loss in 2009 includes after tax mark-to-market losses on gold forward sales contracts of $7.5 million, or $0.06 per share as compared to $14.7 million, or $0.11 per share in the same prior year period. As disclosed in the Company's April 20, 2009 news release, Western Goldfields' production was within the guidance range for the first quarter with cost of sales per ounce(1) below the guidance range. Cost of sales per ounce(1) was positively impacted by lower costs across many of the key inputs, including diesel and explosives. The operations at Mesquite are also benefiting from more experienced equipment operators, better performing radial tires, and increased efficiencies from re-sequencing of the mining operations commencing with the Rainbow pit. The combination of these factors led the Company to a solid first quarter as Western Goldfields generated $8.9 million in cash flow from operations during the quarter. "The operating trend being realized by the Company is very encouraging," said Raymond Threlkeld, President and Chief Executive Officer. "Both our mining rate and the timing of our leach pad recovery continue to improve in line with expectations resulting in excellent cash flow generation from Mesquite." Financial Results ----------------- During the first quarter of 2009, the net loss was $5.3 million or $0.04 per share, compared to $19.6 million or $0.14 per share in the same prior year period. The net loss in 2009 includes after tax mark-to-market losses on gold forward sales contracts of $7.5 million or $0.06 per share as compared to after tax mark-to-market losses of $14.7 million, or $0.11 per share in the same prior year period. Per the terms of the term-loan facility, in the first quarter of 2009 the Company settled three of its 5,500 ounce monthly contracts delivering a total of 16,500 ounces of gold at $801 per ounce. As at March 31, 2009, the Company holds 69 of these contracts representing a total commitment of 379,500 ounces; the increase in the spot gold price between December 31, 2008 ($870 per ounce) and March 31, 2009 ($917 per ounce) was a principal driver of the unrealized portion of the loss on gold forward sales contracts during the quarter. As at March 31, 2009, the cumulative mark-to-market loss on gold forward sales contracts was $57.5 million. The Company also financially settled 630,000 gallons into our fuel hedge contracts and realized losses of $0.3 million. Gold sales in the first quarter of 2009 were 32,715 ounces compared to 9,960 ounces in the same prior-year period; this increase is a result of the Company escalating production in the first quarter of 2008 until Mesquite attained steady-state production from the new leach pad during the second quarter of 2008. The average selling price declined to $867 per ounce in the first quarter of 2009 compared to $929 per ounce of gold in the same prior year period. Liquidity and Capital Resources ------------------------------- Western Goldfields had $26.6 million of cash, including $7.5 million of restricted cash, at March 31, 2009. This increase in cash was a result of the Company generating $8.9 million in cash flow from operations, which was partially offset by $1.5 million in capital expenditures. The capital expenditures during the quarter primarily related to the purchase of a training simulator which is intended to increase driver efficiency and decrease repair and maintenance costs going forward. Western Goldfields continues to project minimal capital expenditures going forward. The Company's debt remains at $68.6 million, and the next scheduled debt repayment of $4.7 million will occur on June 30, 2009. Business Combination with New Gold ---------------------------------- Below is a summary schedule of the proposed Business Combination with New Gold: - May 13, 2009 - New Gold Annual and Special Meeting of Shareholders - May 14, 2009 - Western Goldfields Annual and Special Meeting of Shareholders - June 1, 2009 - Expected closing Additional Information on Non-GAAP Financial Measures ----------------------------------------------------- (1) Cost of sales per ounce is a non-GAAP financial measure which is calculated by dividing cost of sales, as per the Company's financial statements, including realized losses from the settlement of fuel hedge contracts, by the number of gold ounces sold. This is the first quarter where this adjustment has been made as the Company began settling its fuel hedges in fiscal 2009. The Company records the realized and unrealized gains/losses from its fuel hedge contracts in other income. Consequently, we believe that including the realized gains/losses from settlement of fuel hedge contracts provides investors and analysts with a measure of our costs related to production that is more comparable to measures presented by other mining companies. Management also uses this measure internally to monitor, evaluate, and manage those factors that impact production costs on a monthly basis. This calculation is performed on a consistent basis for the periods presented. The cost of sales per ounce statistic is intended to provide additional information, does not have any standardized meaning prescribed by U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP. This non- GAAP measure may not be comparable to similar measures presented by other issuers. Three months ended March 31 2009 2008 Statement of Operations (000's) Cost of sales (excludes amortization and accretion) $ 18,450 $ 9,352 Realized losses from settlement of fuel forward contracts 288 - ------------ ------------ Cost base for calculation $ 18,738 $ 9,352 ------------ ------------ Gold ounces sold 32,715 9,960 Cost of sales per ounce $ 573 $ 939 (2) Average realized gold price is a non-GAAP financial measure. It is calculated by dividing total revenue by ounces sold. We believe that including the average realized gold price provides investors and analysts with a measure of our revenue related to production that is more comparable to measures presented by other mining companies. Management also uses this measure internally to monitor, evaluate, and manage those factors that impact revenue on a monthly basis. The average realized gold price statistic is intended to provide additional information, does not have any standardized meaning prescribed by U.S. GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with U.S. GAAP. This non-GAAP measure may not be comparable to similar measures presented by other issuers. 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 2.6 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 Amex 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. 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 securities law. Such forward-looking statements are identified by words such as "intends", "anticipates", "believes", "expects", "plans" and include, without limitation, statements regarding the Company's plan of business operations, production and cost estimates, receipt of working capital, anticipated revenues, timing of the recovery of gold and capital and operating expenditures. These forward-looking statements are based on the best estimates of management at the time such statements are made. Expected production results and cost of sales (including without limitation, statements made with respect to future production and costs contemplated by our mine plan) are based in part on current and historical production and cost data factoring certain assumptions with respect to future metal prices, costs and availability of supplies and labour and other parameters. 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, variations in metal prices and/or cost of supplies, possible variations in ore grade or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labour disputes, as well as those set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 filed with the U.S. Securities and Exchange Commission and with SEDAR, under the caption "Risk Factors" as well as other filings made by the Company with securities regulatory authorities. 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 regulations, 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. WESTERN GOLDFIELDS INC. CONSOLIDATED BALANCE SHEETS (In thousands U.S. dollars) (Unaudited) March 31, December 31, 2009 2008 ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents $ 19,057 $ 11,275 Restricted cash 7,500 7,500 Receivables 634 2,550 Inventories 34,964 35,098 Prepaid expenses 1,517 1,747 Current portion of deferred income tax asset 3,716 2,045 ------------ ------------ TOTAL CURRENT ASSETS 67,388 60,215 ------------ ------------ Plant and equipment, net of accumulated amortization 109,729 111,334 Investments - reclamation and remediation 8,960 8,934 Long-term deposits 371 367 Long-term prepaid expenses 1,341 1,384 Deferred debt issuance costs, net of accumulated amortization 2,593 2,766 Deferred income tax asset 24,696 22,368 ------------ ------------ TOTAL OTHER ASSETS 147,690 147,153 ------------ ------------ TOTAL ASSETS $ 215,078 $ 207,368 ------------ ------------ ------------ ------------ LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 7,058 $ 7,484 Current portion of mark-to-market loss on gold hedging contracts 8,071 5,606 Current portion of mark-to-market loss on fuel hedging contracts 809 540 Current portion of loan payable 11,656 11,656 Current portion of reclamation and remediation liabilities 339 339 ------------ ------------ TOTAL CURRENT LIABILITIES 27,933 25,625 LONG-TERM LIABILITIES Mark-to-market loss on gold hedging contracts 49,406 39,580 Mark-to-market loss on fuel hedging contracts 425 391 Loan payable 56,984 56,984 Reclamation and remediation liabilities 4,824 4,737 ------------ ------------ TOTAL LIABILITIES 139,572 127,317 ------------ ------------ STOCKHOLDERS' EQUITY Common stock, of no par value, unlimited shares authorized; 135,581,286 and 134,801,286 shares issued and outstanding, respectively 134,043 133,383 Stock options and warrants 8,378 8,291 Accumulated deficit (66,915) (61,623) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 75,506 80,051 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 215,078 $ 207,368 ------------ ------------ ------------ ------------ WESTERN GOLDFIELDS INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME / LOSS (In thousands U.S. dollars) (Unaudited) Three Months Ended March 31, 2009 2008 ------------ ------------ REVENUES Revenues from gold sales $ 28,369 $ 9,256 ------------ ------------ COST OF GOODS SOLD Mine operating costs 17,806 9,087 Royalties 644 265 ------------ ------------ Cost of sales (excludes amortization and accretion) 18,450 9,352 Amortization and accretion 2,776 2,094 ------------ ------------ 21,226 11,446 ------------ ------------ GROSS PROFIT (LOSS) 7,143 (2,190) ------------ ------------ EXPENSES General and administrative 1,370 1,481 Exploration and business development 1,478 224 ------------ ------------ 2,848 1,705 ------------ ------------ OPERATING INCOME (LOSS) 4,295 (3,895) ------------ ------------ OTHER INCOME (EXPENSE) Interest income 44 384 Interest expense and commitment fees (486) (699) Amortization of deferred debt issuance costs (173) (115) Realized and unrealized loss on mark-to-market of gold forward sales contracts (12,291) (24,111) Realized and unrealized loss on mark-to-market of fuel forward contracts (591) - Loss on foreign currency exchange (99) (1,020) ------------ ------------ (13,596) (25,561) ------------ ------------ LOSS BEFORE INCOME TAXES (9,301) (29,456) INCOME TAX RECOVERY 4,009 9,832 ------------ ------------ NET LOSS $ (5,292) $ (19,624) ------------ ------------ ------------ ------------ BASIC AND DILUTED NET LOSS PER SHARE $ (0.04) $ (0.14) ------------ ------------ ------------ ------------ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 135,189,376 135,659,101 ------------ ------------ ------------ ------------ WESTERN GOLDFIELDS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands U.S. dollars) (Unaudited) Three Months Ended March 31, 2009 2008 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (5,292) $ (19,624) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Items not affecting cash: Amortization of plant and equipment 2,531 2,013 Amortization of deferred debt issuance costs 173 115 Accretion expense 87 87 Deferred income taxes (3,999) (9,832) Interest net of reimbursed costs - reclamation and remediation (26) (63) Stock based compensation 350 370 Mark-to-market loss on gold hedging contracts 12,291 24,112 Mark-to-market loss on fuel hedging contracts 303 - Changes in assets and liabilities: Decrease (increase) in: Accounts receivable 1,689 78 Inventories 320 (6,041) Prepaid expenses and deposits 269 83 Increase (decrease) in: Accounts payable 1,463 (1,337) Payroll and related taxes payable - (1,563) Accrued liabilities (1,204) 1,051 Accrued interest expense (39) (171) ------------ ------------ Net cash provided (used) by operating activities 8,916 (10,722) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Purchase of plant and equipment, including construction in process (1,531) (8,749) ------------ ------------ Net cash used by investing activities (1,531) (8,749) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Advances under loan facilities - 7,860 Exercise of options to purchase common stock 397 233 Exercise of warrants to purchase common stock - 337 ------------ ------------ Net cash provided by financing activities 397 8,430 ------------ ------------ Change in cash and cash equivalents 7,782 (11,041) Cash and cash equivalents, beginning of period 11,275 43,870 ------------ ------------ Cash and cash equivalents, end of period $ 19,057 $ 32,829 ------------ ------------ ------------ ------------ SUPPLEMENTAL CASH FLOW DISCLOSURES: Interest paid $ (526) $ (797) ------------ ------------ ------------ ------------ Interest received $ 21 $ 384 ------------ ------------ ------------ ------------ Taxes paid $ (44) $ - ------------ ------------ ------------ ------------ NON-CASH FINANCING AND INVESTING ACTIVITIES: Stock options and warrants issued $ 350 $ 370 Equipment purchases included in accounts payable $ 132 $ 513 Non-cash component of inventories $ 186 $ - DATASOURCE: Western Goldfields Inc. CONTACT: please visit http://www.westerngoldfields.com/, or contact: Raymond Threlkeld, Chief Executive Officer, (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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