Wesdome Gold Mines (OTC:WDOFF) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Wesdome Gold Mines reaffirmed its 2026 production guidance of 180,000 to 205,000 ounces but expects consolidated production to be below the midpoint, with all-in sustaining costs at the upper end.
Q3 2026 revenue was $251 million, net income was $90 million, and EBITDA reached $157 million, bolstered by a higher gold price but offset by a 12% decrease in ounces sold.
The company is focused on strategic growth through exploration, staffing improvements, and operational execution, particularly at Eagle River and Kiena mines, with significant Q4 improvements expected.
Wesdome is debt-free, with a cash balance of $380 million and available liquidity of $735 million, and has paused its share buyback program while considering potential dividend increases.
Management emphasized long-term growth potential, highlighting exploration successes, and plans to release a conceptual study on the Mishi-Magnacon area next year.
Full Transcript
OPERATOR
As a reminder, this call is being recorded. Your host for today is Trish Moran, Wesdome’s Vice President of Investor Relations. Please go ahead.
Trish Moran (Vice President of Investor Relations)
Thank you, operator, and good morning, everyone. Before we get started, I’d like to point out that during today’s call we may make forward-looking statements as defined under Canadian securities law. I ask that you view our slide presentation for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Please note that all figures discussed on this call are in Canadian dollars unless otherwise noted.
Our press release, MD&A, and financial statements are available both on SEDAR+ and on our corporate website wesdome.com. With us on today’s webcast are Anthea Bath, Wesdome’s President and CEO; Phil Yee, our Chief Financial Officer; Tyler Mitchelson, our COO; Jono Lawrence; Raj Gill; and Kevin Lonergan. Following management’s formal remarks, we will then open the call to questions. And now, over to Anthea.
Anthea Bath (President and CEO)
Thank you, Trish. Good morning, everyone. We are reaffirming our 2026 production guidance of 180 to 205,000 ounces. Our fourth quarter is expected to be our strongest of the year, with both Eagle River and Kiena finishing within their respective guidance ranges. Consolidated production is expected to be below the midpoint of guidance, with all-in sustaining costs towards the upper end of guidance. Third quarter production fell short of our expectations.
I will explain what drove the shortfall and why we remain confident in our full-year outlook, then turn to our longer-term strategy. At Eagle River, throughput continued to ramp up as planned. However, one stope returned lower grades than expected and one sill was not fully mined, reducing both grade and ounces. At Kiena, gaps in workforce planning reduced equipment utilization and productivity, delaying the mining sequence. Two high-grade stopes from Kiena Deep were shifted into Q4. Because of this, we processed a larger share of low-grade ore from Presqu’ile, impacting the overall feed grade to our mill.
We have identified the causes and we’re implementing the staffing and planning changes needed to improve execution. Our Q4 outlook is reinforced by available high-grade inventory and operating progress already achieved early in the quarter. At Eagle River, key stopes in the sequence are now confirmed and drilled off. At Kiena, improved staffing is lifting productivity. Stope inventory has increased and Presqu’ile is moving into high-grade production sequence and higher tonnage. Tyler will cover these developments in more detail.
Safety performance continues to improve, with our total recordable injury frequency rate down 29% from the third quarter of last year. I’d really like to thank my team for the great progress they continue to make. Safe work, sound planning, and consistent execution remain fundamental to the company that we are building. The quarter reinforced a key lesson: as our mines grow, the operating cadence that supports them must also grow. Development, maintenance, equipment, and workforce planning must function as an integrated system to deliver a reliable supply of ore.
Three years ago we set about a deliberate strategy: rebuild our operating and technical capabilities, understand our geological systems, and then grow. We now have a stronger technical foundation—eight-year reserve-based plans at both our mines, the largest reserve base to date, and geological models that are now increasingly informing our mine plans. Our priority is to translate that foundation into consistent operating performance and disciplined growth.
The technical reports we published earlier this year were the first public demonstration of that work. That work is now showing up in our operating results. Eagle River achieved record quarterly mill throughput in quarter three, and tonnes milled are up 20% this year across both our operations. The task now is to convert those gains into consistent ounces quarter after quarter. We’re moving up the curve, and I expect this performance to keep improving throughout 2027.
The drill bit is also strengthening our confidence. We’ve always believed the geology at both mines was significant. What has changed now is that the concepts that were hypothesized not too long ago are being supported by real drill results. At Eagle River, high-grade structures continue beyond the current resource, supporting the potential for a larger mineralized system. We also see potential for a hub-and-spoke bulk tonnage opportunity, adding production upside to the Eagle River complex.
At Kiena Deep, we’re intersecting wide mineralized zones in the northernite footwall, close to infrastructure. Numerous other opportunities are becoming evident as we showcase the potential of the system. At Kiena Deep and Kiena East, reoriented drilling at Shawkey returned 106.5 meters at 3.1 grams per tonne, a result that warrants further drilling to establish continuity and scale. It’s early days, but the results are trending in the direction we expected.
We measure the progress against our strategy with four tests. First, is the exploration confirming geological continuity and near-mine opportunities close to our existing infrastructure? Second, is the step-out drilling showing that our high-grade structures continue? Third, are we confirming open-pit and underground bulk tonnage mineralization that could support meaningful expansion? And fourth, are higher volumes and better use of our infrastructure lowering our unit cost per tonne?
On all four, the evidence is building, and we expect 2027 to further show this. Over the next year, our focus is conversion, turning exploration targets into a larger, more substantial resource base. At Eagle River, we aim to demonstrate its potential as a district-scale mining complex with open-pit and underground sources, similar to other operations in the region. Throughout, we will protect our margins through cost control and disciplined planning.
At Kiena, we have an active exploration program. At the Kiena Deeps, we will continue to explore the northernite footwall and parallel zones. At Kiena East, we’ll keep testing for the scale and the breadth of the system and advance our understanding of the corridor, including Shawkey 10 and the 134 and Dubuissant zones. Finally, next year we’ll begin the global model workup at Kiena North as well. This ambition is grounded in our track record. Since 2016, Wesdome has roughly doubled production every four to six years. We believe our existing assets provide a credible path to the next doubling and potentially more over the next five to ten years. Our job is to prove that step by step—through drilling, through conversion planning, and proper execution. We’ll pursue this growth from a position of financial strength. Our recent dividend declaration reflects our disciplined approach to allocating our owners’ capital.
With a debt-free balance sheet and strong liquidity, we are well positioned to fund our growth internally while delivering consistent cash returns to our shareholders. For investors tracking our progress, the near-term milestones are fourth-quarter delivery, commercial production at Presqu’ile, our upcoming 2027 guidance, our next reserve and resource update, conceptual studies on our bulk tonnage targets, and continued exploration results from both districts across the year. Our immediate priority is strong execution. Our longer-term objective is to turn the potential of these two districts into sustained growth in cash flow and value per share.
I will now turn it over to Phil.
Phil Yee (Chief Financial Officer)
Thank you, Anthea. Good morning, everyone. Turning to Slide 6, third quarter 2026 revenue was $251 million. Net income was $90 million, equating to $0.62 per share, and EBITDA was $157 million, all at higher levels than Q3 2025 results due primarily to a 23% increase in the average gold price, partially offset by a 12% decrease in ounces sold as a result of lower production at Eagle River. In Q3 2026, net cash flow from operating activities was $102 million, and free cash flow was $52 million, equating to $0.36 per share, both cash indicators lower than Q3 2025 levels.
The year-over-year decrease in quarterly free cash flow reflects several factors resulting from the lower production in Q3 2026, including lower net cash from operating activities, higher mine exploration and development costs, and higher sustaining capital at Eagle River. Year to date, Wesdome Gold Mines has generated nearly $220 million in free cash flow, and with a strong fourth quarter expected, we expect full-year free cash flow to exceed last year’s record $278 million.
And if the Canadian government’s recently announced Productivity Mega Deduction Program is passed, this could have a further positive impact on 2026 and future years, as the policy will be retroactive to September 15, 2026. The new federal program allows qualifying businesses to immediately expense, for tax purposes, 100% of the cost of eligible capital investments and Canadian development expenses in the year the asset becomes available for use, or qualifying exploration drilling has been incurred, rather than depreciating it over time.
Turning to Slide 7, on a consolidated basis, all-in sustaining costs were $1,789 US per ounce sold in the quarter, 26% higher than the Q3 2025 AISC of $1,419 US per ounce sold. This was driven mainly by the lower volume of gold sold in Q3 2026 at Eagle River. At Eagle River, Q3 2026 AISC was $1,843 US per ounce sold compared to $1,203 US in the third quarter of last year. The increase reflects a 25% decrease in ounces sold combined with a 31% increase in sustaining capital.
At Kiena, Q3 2026 AISC was $1,713 US per ounce sold compared to $1,899 US in the third quarter of last year. The lower AISC reflects an 18% increase in gold ounces sold combined with a 40% reduction in sustaining capital driven by a delay in commercial production at Presqu’île to the first quarter of 2027. Consolidated AISC per ounce sold is expected to decrease in the fourth quarter, driven by higher production and higher sales combined with lower costs from supply chain initiatives.
Full-year AISC per ounce sold is expected to be within the 2026 guidance range at the top end of the range. Maintaining a low AISC is a key part of Wesdome Gold Mines’ strategy to protect our margins. Year-to-date capital spend was $132 million. We expect a significant increase in capital spend in Q4 2026 as a result of the timing of equipment deliveries and growth expenditures. Our full-year total capital spend is expected to meet 2026 guidance of $205 million. Wesdome Gold Mines is expecting higher growth capital spend in 2027 to support the company’s exciting organic growth strategy at both assets. Corporate G&A was $6 million this quarter, a decrease of approximately one-third year over year and down about 45% from Q2.
G&A is lower in Q3 2026 now that the technical reports are completed and behind us. Turning to Slide 8, we closed the third quarter with a cash balance of $380 million. Our balance sheet remains debt free with available liquidity of $735 million as of September 30th. Most notably, the $380 million cash balance is after returning approximately $50 million to shareholders in Q3 of 2026. This includes $46 million through share repurchases under a normal course issuer bid and $4.4 million through a quarterly dividend paid at the end of September.
Since launching our share buyback program last November, we have repurchased more than 7.8 million shares at an average price of $24.44 for a total of approximately $191 million. And as you’ve seen in last night’s press release, the TSX has approved Wesdome Gold Mines’ application to renew our share buyback program over the next 12 months. We have the optionality to buy back up to approximately 7.2 million shares, or about 5% of our public float.
We are currently going through our 2027 budget process. Once we have defined the business’s operating and capital requirements for next year, we will determine the appropriate allocation available to potentially continue the share buyback program. Before I hand it over to Tyler, a few items on our upcoming reporting. We are scheduled to release our year-end 2026 results a couple of weeks earlier this year, on February 24th. Concurrent with earnings, we will also be issuing our guidance for 2027. We also expect to release our 2026 mineral reserve and mineral resource update in the first half of next year. With that, I’ll now turn it over to Tyler to walk through our operational performance.
Tyler Mitchelson (Chief Operating Officer)
Thank you, Phil, and good morning, everyone. Let me start with safety across both sites. Our total recordable injury frequency rate was 1.01 in Q3, down from 1.43 a year ago. High potential incidents, the leading indicator we watch most closely, were 0.67 in Q3 and 0.79 year to date, also improving year over year. We’re encouraged by the progress and continue to emphasize it every day. Our expectation is simple and non-negotiable: everyone goes home safely at the end of every shift.
Moving to slide 10, we produced nearly 41,300 ounces in Q3 and approximately 130,000 ounces year to date. Operational performance in the quarter reflects the planned transition to district scale operations as we position Wesdome as a stronger, longer-life mining company. Q3 was below our expectations. Part of that was planned for Presqu’Île’s ramp-up and Eagle River’s transition to filling the mill; part was not at Kiena Deep. We did not execute as well as we needed to and I will discuss the specific drivers in detail.
We are on track to finish in the lower half of our consolidated 2026 production guidance range. Turning to Slide 11. Delivering on Eagle River’s low-cost scalable potential is critical and we’re making good progress. Eagle River produced nearly 25,000 ounces in Q3, up from approximately 22,000 ounces in Q2. The grade averaged 10.1 grams per tonne compared to 9.7 in Q2, and grades continue to reconcile well. July grades came in as anticipated at over 12 grams per tonne. However, one high-grade sill was delayed and one stope came with lower-than-expected grades.
Our mining sequence and the updated reserve plan include lower-grade stopes and development ore alongside high grade. Production throughput increased, but it did not fully offset the lower average grade the stopes expected to deliver. A significant share of Q4 ounces are already drilled off. The sequence is now in the high-grade core and our geology review supports the plan. The broader story is the evolution of the mine—Eagle River moving to a higher-tonnage, longer-life model with more tonnes from the recently updated mineral reserve.
Ore milled has increased every quarter this year and is up 24% year to date. That growth is central to filling the mill and building a larger, more valuable operation. We processed nearly 80,000 tonnes in Q3, a quarterly record, up 10% from Q2 and up 12% from a year ago. That’s an average of almost 870 tonnes per day, with the rate continuing to build in Q4. That performance gives us confidence in reaching the fill-the-mill targets set out in our latest technical report.
Another benefit of increasing scale is that the more tonnes we move, the less any single stope shapes the result. In Q4, we expect both grade and tonnes to increase, and that combination is what will drive a stronger quarter at Eagle River. Grade reconciliation supports confidence in the ore body; preparation and operating execution determine whether we will deliver those ounces on schedule. And as exploration continues to succeed, we have opportunities to add high-grade material to bolster the long-term production profile of the mine.
Moving to slide 12. In Q3, cost per tonne processed was $511, down nearly 20% from $631 in Q2. That is an increase from one year ago to $495, reflecting inflationary factors impacting the industry offset by fixed cost leverage. As we continue to scale the mine, we expect unit costs to improve. Capital spending totaled $21 million in Q3 and $48 million year to date against a full-year plan of $105 million. We expect spending to increase in Q4 when most machinery and equipment deliveries are scheduled.
However, capital allocated to the camp replacement is moved into early next year because of unit availabilities. The tailings storage facility lift is progressing well and is on track for completion shortly. Turning now to Kiena on slide 13. Kiena produced over 16,000 ounces in Q3, up 2% year over year, but below a strong Q2. Seasonal workforce availability impacted operations. The result was lower equipment and operator availability, impacting stope development, and a planned shutdown that extended into unplanned downtime. We are addressing this in two ways. First, strengthening our workforce planning—staffing has already improved now that the summer season is behind us.
Second is improving our contractor agreements to increase accountability, continuity, and cost control. These issues slowed the development at Kiena, leaving fewer stopes ready to mine and shifting two higher-grade Kiena Deep stopes into Q4. Grade averaged 8.2 grams per tonne compared to 11.1 in the last quarter and 12.2 in Q3 2025. As expected, the mill feed blend drove most of the quarter-over-quarter change. Presqu’Île contributed approximately 25% of the tonnes compared to 10% to 15% in recent quarters.
That reflected two factors: a higher share of lower-grade ore as Presqu’Île ramps up towards steady state, and the shift of two higher-grade Kiena Deep stopes into Q4. Importantly, grade is reconciling positively at both Kiena Deep and Presqu’Île. The deferred Kiena Deep stopes are in the Q4 plan. Improved productivity has improved stope inventory. Presqu’Île continues to ramp up and is moving into a higher-grade sequence. The practical benefit is more places ready to mine in the sequence.
If one area is delayed, another developed source of ore keeps the mill supplied. Mill throughput rose 27% year over year to approximately 64,000 tonnes, or 693 tonnes per day. Filling the mill is central to Kiena’s strategies and we expect tonnage to continue increasing. Kiena Deep delivered its highest monthly tonnage of the year in September at more than 800 tonnes per operating day, proving the mine has the capability to operate at rates that support our continued ramp-up through Q4.
Presqu’Île ramped up steadily through Q3 to more than 250 tonnes per day. We will continue to ramp up through Q4 and commercial production is now expected in Q1 2027. With Presqu’Île operating and Level 142 advancing, the multi-horizon model is beginning to provide greater operational flexibility and optionality. We expect a solid Q4 at Kiena with the ramp-up of Presqu’Île stope ore and the increased stope availability at Kiena Deep. Turning to slide 14. Unit costs were $492 per tonne processed in Q3 compared with $526 in Q2 and $506 in Q3. Higher throughput drove the quarterly sequential improvement, partly offset by maintenance costs related to the extended shutdown. As Presqu’Île reaches commercial production and Kiena Deep fully ramps up, we’ll spread the fixed cost base over significantly more tonnes. That provides a clear path to lower unit costs, shown by the unit cost reductions at the site year to date.
At Kiena, we’re applying the same cost discipline that has driven improvement at Eagle River. The work is earlier in the cycle, so our largest gains are still ahead. Kiena’s capital spending was $21 million in Q3 and $84 million year to date, including $58 million of growth capital. We expect Kiena to finish near the upper end of its capital guidance as we invest in its future operating potential. Key Q4 spending includes continued Presqu’Île development, Kiena Deep ramp extension to Level 142, and ventilation fan upgrades.
The ventilation expansion is progressing well and is expected to be completed early next year. It will double our underground airflow, support higher mining rates, and improve exploration flexibility. To summarize, our Q4 forecast has us on track to deliver our consolidated full-year guidance range, albeit below the midpoint. Our focus across both operations is on labor productivity, supply chain optimization, maintenance, and unit cost improvements. At both mines, we’re building longer-life, higher-throughput operations. Quarterly results may vary as these plans advance, but the underlying trends continue to improve. And now I’ll hand the call over to Jono for our exploration update.
OPERATOR
We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Wayne Lamb with TD Securities.
Your line is open. Please go ahead.
Wayne Lamb (Analyst)
Hey, thanks. Morning guys. Maybe at Kiena, just on the Presqu’ile tonnage ramp-up into next year, is the planned contribution still targeting a run rate of about 400 tons per day? And can you provide a bit more detail on the positive reconciliation you’re seeing there to date? And then with the two higher-grade stopes from Kiena Deep in Q4, should we be modeling significantly higher grades in the quarter even with the lower-grade tonnage contribution from Presqu’ile?
Anthea Bath (President and CEO)
Okay, so. Hi Wayne, thanks for the questions. I’ll just quickly summarize. At a high level, the ramp-up of Presqu’ile in the quarter four of three was really good, and I think you’ll see Tyler will give you an indication of next year. It continues to ramp up to that point, but I think just importantly for Kiena Deeps what’s happened here is a removal moving onto two stopes into the next quarter which essentially cannot be caught up properly. So essentially the grades are much the same, I would say more or less, in the quarters.
The ratio may change a bit, Wayne, where we’ll get a bit more, but you’re not going to see—you’ll see a bit of an improvement in overall grade, but you’re going to see more tonnes coming through from both mine or both areas as well. So maybe just give an indication for Presqu’ile.
Tyler Mitchelson (Chief Operating Officer)
Go-forward basis, we’ll continue to ramp up. You know, we are 250—000, or sorry, wrong—250 tons per day, and we’ll ramp that up in Q3. And what we’re looking at for 2027 will be annually probably 110 to 130,000 tons out of there, which will get you anywhere in that 300 to 400 tons per day. So it’s moving as predicted and as anticipated. And the reconciliation, I’ll just maybe comment on that as well. Do you want to just give a quick comment there?
Phil Yee (Chief Financial Officer)
I think just looking at both Kiena Deep and PI, I think year-to-date we’re seeing reconciliations come in where we want or as expected based on our model. So there’s no material issues or drama there.
Wayne Lamb (Analyst)
Okay, great, thanks. And then maybe at Eagle River, just looking into the months ahead, can you give us a bit more detail on the change in mining sequence that you’ve talked about in terms of bringing more low grade and incremental ore in at a lower cutoff? And is that thinking already baked into the updated mine plan in terms of the process grades at 8.8 next year, or can you give us an idea of how mining is shifting in real time versus that plan?
Anthea Bath (President and CEO)
Okay, that’s a great question, Wayne, and I think we need to clarify this properly in that case. Okay, so if you look at what we’re doing in terms of the transitioning of Eagle River upwards, we put the data out and we’re delivering to that, and we’ll keep pushing to that particular plan and we do not go out of sequence. I think what’s important to note is that what you’re seeing is we are in the sequence of higher grade in this quarter. I think it’s critical to say that we’re really trying to maintain good execution on our operations and maintain sequence.
So it’s just a matter of where you are in the mine at the moment. And right now what you probably see is higher grade from Eagle. The overall grade for next year will definitely not be at 8.8. It’s going to be a lot higher than that. So we are targeting the double-digit grade, as we told you before. This is, you know, the combination that you’re getting in terms of average grade in terms of technical reports — a function of the global model addition, not a function of sequencing for the plan for this year. So it’s really important that there’s a distinction between the two.
Your technical reports look at 2P reserves. They do not look at the plan that we have in front of us. And obviously the additional drilling we’ve done in the year to confirm the upgrade, as well as the mine sequencing work we do to optimize the plan correctly for the outcome we want. We are transitioning Eagle River up to a much higher-tonnage mine. And as we’re doing that, we’re going to make sure that these plans correlate correctly as we do along the timeline.
Wayne Lamb (Analyst)
Okay. Okay, great. Thanks for that detail. And then maybe just last one, it looks like maybe there’s a bit of a pause on the buyback program. So just wondering how you’re looking at the pace of execution now and if there’s any appetite to increase the dividend given the growing balance sheet.
Anthea Bath (President and CEO)
I’m going to hand over to Phil. Yeah.
Phil Yee (Chief Financial Officer)
Yeah, thanks. Thanks, Anthea. Hi, Wayne. So I mean the buyback program at this point is on pause. We’re preparing our budget for 2027 and, you know, once we get a sense of how that’s coming together and what other priorities may emerge, you know, the buyback program gives us that flexibility. In terms of the dividend at this point, again, you know, our approach to capital allocation is going to be dependent on our budget and, you know, the same priorities.
If there’s an opportunity to increase the dividend, we definitely will look at it.
Wayne Lamb (Analyst)
Okay, great. Thanks for taking my questions.
OPERATOR
Your next question comes from the line of Jeremy Hoy with Canaccord Genuity. Your line is open. Please go ahead.
Jeremy Hoy (Analyst)
Good morning, Anthea and team. Thanks for taking my questions. I want to look ahead a little bit. First off, something that’s been very topical across the sector, costs in 2027. Just wondering if you guys can give us any color on what to expect in 2027 and various inflationary pressures, et cetera, as we look to tweak estimates for the following year.
Phil Yee (Chief Financial Officer)
Hi Jeremy, it’s Phil here. Yeah, definitely there’s inflationary pressures. I think for Wesdome, our biggest impact on the inflationary pressure side is with manpower. And, you know, we’re actively looking at the impact for 2027 in our budget process — priorities to try to reduce reliance on contractors and, you know, fill key positions with permanent employees. I’d say that’s probably one of the biggest potential inflationary impacts. At the same time, we’re also looking at opportunities to improve efficiencies. And, you know, one of the areas is supply chain. You know, we’re looking at improved pricing with suppliers, getting better control over key contracts and so forth. So there’s a number of initiatives underway and the hope is that, you know, some of our potential savings will help to offset some of the inflationary pressures.
Jeremy Hoy (Analyst)
Okay, great, thanks. I appreciate the color. So the other question I have is about the upcoming reserve and resource update. And I think you guys have done a great job of sort of highlighting the exploration potential you have at both sites. And so I’m wondering, ahead of this resource reserve update, can you help us write a little guidance on how we should think about it? Is this going to be an incremental increase or something more substantial?
And if this one is incremental, when can we expect potentially more substantial increases following near the pretty aggressive exploration program that you guys have ongoing?
Anthea Bath (President and CEO)
It’s a great question. And generally we’re in phase in year two of the exploration program at the moment. So next year the resource reserve should reflect some of those outcomes. I think what’s important is when you look at what John has been working on — I’m talking on behalf of him and he can comment himself — but he’s been working on understanding the orebody, your step-height drilling, growing resources, and obviously adding your higher-grade reserves to the plan as well.
So there’s a whole combination of drilling that’s composing that particular story. I think we feel really excited about what we’re seeing from a geological potential perspective, and the work we’re doing is really leading the program from a strategic perspective and we’re building it out in the right kind of way. So hopefully some of that reflects nicely in the resource — we’re hoping to see that. It’s really what we’re hoping to see: a growth in that resource side more than even the reserve side. But what I see is that the progression is more around the next three to four years and how it’s going to continue, and it’s fully aligned in terms of how we think about the planning side as well.
So I don’t know if that helps, but it’s, you know, the focus of Wesdome is both short term to maintain execution, deliver well in execution, and long term to build out what we know this company can become. So these two run hand in hand in parallel. You know, the link in between the two and how we build the one to the other is the transitioning that the stage team is going to have to be darn good at, and we’re going to become extremely good at it over the while.
But let me tell you, I think that that exploration program over the next three to five years can be pretty darn interesting.
Jeremy Hoy (Analyst)
Okay, great. Well thanks, Anthea. I appreciate that color. That is helpful. I’ll step back in the queue.
OPERATOR
Your next question comes from the line of Harrison Reynolds with RBC Capital Markets. Your line is open. Please go ahead.
Harrison Reynolds (Analyst)
Morning Wesdome team and thanks for taking my questions. Bit of a follow-up to the cost question so far. Looking at the three-year outlook that came with the technical reports, could you talk about your confidence in achieving the outlook as planned with consideration to the ongoing cost pressures and the focus on more bulk tonnage mining? Do you still think the range of $1,600 to $1,750 an ounce AISC is a reasonable target on a go-forward basis?
Phil Yee (Chief Financial Officer)
Yeah, hi Harrison, it’s Phil here. I think that’s a starting point but the world’s evolving. There’s, for example, the FX rate — we’re watching to see how that’s going to impact costs going forward. Inflation seems to be ramping up higher than expected, maybe even higher than what was in the three-year outlook. And as I mentioned earlier, at the same time we are looking at opportunities to offset and reduce costs as well. So our guidance this year was a midpoint of about $1,650 per ounce sold. If you account for let’s say a 5% inflation rate going into next year, you’re already looking at $1,730 to $1,750. If inflation’s higher than that, that will drive it up a little bit higher. But we are actively looking to try and manage that number as best we can with some of the initiatives that we have underway.
Harrison Reynolds (Analyst)
Got it. Thank you. Appreciate the detail there. Also wanted to ask on some of these growth options at Kiena. More exploration on Kiena East and the bulk tonnage mineralization there. Can you give us your latest thinking on how this fits into the Kiena mine plan? Whether it’s a third source of mill feed beyond Kiena Deep and Presqu’ile, or how do you imagine this fitting into the Kiena district?
Anthea Bath (President and CEO)
Harrison, great question. And the nice part is there’s lots of optionality, which makes me quite excited. So we’ve obviously worked on this in numerous metal processing routes. We have a mine plan right now on Dubason, so we could mine on a conventional basis — Dubason through the current exploration or that level 33 drift that you’re aware of — immediately at a certain tonnage level. We’re choosing not to. But should we choose to see an escalation or growth, we could use that as an option to start.
We could also look to increase the ability within that drift from a more conventional mining perspective — sorry, a more mechanized mining perspective. So that’s another option. There’s multiple options available to Wesdome right now to actually process this, and I think we have various routes that the team has worked on in terms of how quickly we can get it into mill, how quickly we want to get it in the mill. I think the big question that we keep asking ourselves is on honouring the orebody correctly and when the right time is to do this. And that will obviously determine how quickly we get it into the mill.
But I think it’s really important to note that Wesdome could mine that immediately and is choosing not to, for good reason, because we really believe that the bulk scale potential is quite significant — which then would result in a much more significant opportunity from a value perspective for shareholders.
Harrison Reynolds (Analyst)
Got it. And if I could just follow up on one more district-related question, switching gears to the Eagle River district. Can you give us a sense of the timeline of when we might get a sense of what Mishi-Magnacon could mean to the mine plan?
Anthea Bath (President and CEO)
So next year we’re planning on putting a conceptual study out on that and that should hopefully give you a sense of what that looks like. But even this year I think Jono is intending to put something out before the end of the year on what Mishi’s first bit has shown. So I think you should get a sense of how quickly you can grow this orebody with the work he’s done. And then you should think about this from how many other potential opportunities are in the region and how his work will translate into broader values.
So when you look at the work he puts out, think about it as a growth rate and how quickly the growth rate was achieved and then apply that to his other orebodies and then you’ll get a sense of scale. So next year the conceptual study will give you a better, more firm sense; this year numbers will tell you what it can indicate towards.
Harrison Reynolds (Analyst)
Got it. Great. Thanks for taking my questions and yeah, looking forward to the ongoing program. Thanks so much.
OPERATOR
Your next question comes from the line of Simon Wildsmith with Desjardins. Your line is open. Please go ahead.
Simon Wildsmith (Analyst)
Thanks. Team, a few questions from me. Maybe just to start, at Eagle we saw one stope come in below expected grade. Just wondering, was this a reconciliation sort of issue — shortfall against the model — or dilution? Just trying to get a feel for how the global model has been reconciling so far this year at Eagle.
Anthea Bath (President and CEO)
Yeah, so I mean everything — I think both Jono and Tyler said that the reconciliation at Eagle remains really good. So, so far things are looking very good. I would argue that the grades are the grades. I don’t think — Tyler, if I’m not mistaken, your grades look pretty much intact, except for the one change that you described a little bit earlier. Yeah, honestly it was a bit of an anomaly. We mined, you know, the two stopes below and the stope above which we’re mining right now are reconciling as we expected. This one was a bit of an anomaly in the quarter, but everything else is tracking as we’ve expected. And year to date we’re tracking as expected, particularly in the 300, and we’ve gone through all of the stopes and the sequence in Q4 and are confident with what we have in there and the model, and what we’re seeing so far quarter to date is things are tracking well.
I mean the transitioning towards this larger-scale mining operation is working well. It’s a transition though. So as you’re going through it, you’re going to, you know, you’ll see some of these things, but it’s certainly moving in the right direction. Okay, so what you would have seen in a plan before for Kiena would have been Kiena Deeps, Presqu’ile Northwest, and a little bit of Dubuisson from a selective high-grade mining perspective. It’s not a lot, going to be about 40,000, 50,000 ounces in reserve on Dubuisson in the old land.
Yeah, yeah, exactly. So that would have obviously changed. Yeah, so what you would have seen, and that’s going to change obviously with time. So there’s no Shorkey in that. There’s none of those other zones, I don’t believe, correct, Kevin. In the old plan in the Eagle side there’s no Mishi, there’s no Magna Con, there’s none of that. It’s only from Eagle River itself and it’s only from the traditional zones that you know. So all the growth that you’ve seen would have been is outside of that.
We have very aggressive timelines internally, as you can probably imagine. So I think we’re obviously going to try and figure out how we can start showcasing what this looks like in the right kind of way, and John, I’m sure, will figure out how to try and explain it a bit better. But I’m not sure it will be like a perfect science, you know, in a way that a lot of people want to see it from a perfect resource-reserve statement, and probably be showing more the scale.
So, John, I mean I think next year your drilling work should translate, correct, into something that gives a sense of what this thing could be.
John
Correct, Anthea? Correct. So we’ve re-reviewed some of the historic data, and from an interpretation of that information we’ve drilled in a different orientation, and that’s brought very positive results. So we’ve got now three drill rigs in that area. And the idea is to drill out over the winter, size scale, to see how big this system could be with the aim then—and these are step-out holes, as you can imagine—then it would be a case of infilling it next year to get it to a level where we could call it a resource.
And once we have an idea of that resource and size, then whether it’s the end of next year or early 2029, it would not be from a shortage of drill rigs and possibilities. It’s on the land. We can be very aggressive. It’s just the timing of when we could do this work.
Anthea Bath (President and CEO)
And I mean you can imagine that parallel to this we would be running scenarios and mine planning work through Kevin’s team. So all of this is happening as we speak. It’s just a matter of getting information accuracy level that we can actually report it correctly.
OPERATOR
We have reached the end of the Q and A session. This concludes today’s call. Thank you for attending. You may now disconnect.
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