Wednesday, August 01, 2007 10:38:12 AM
Press Release Source: Western Goldfields, Inc.
Western Goldfields Announces Second Quarter Results
Wednesday August 1, 9:30 am ET
- All second-quarter milestones achieved to bring Mesquite Mine into full production
- Term loan facility and related gold forward sales contracts in place
- Mine fleet deliveries and construction program on schedule
- Pre-strip mining commenced June 2007
- Full production expected January 2008
TORONTO, Aug. 1 /PRNewswire-FirstCall/ - Western Goldfields Inc. (TSX:WGI, OTC BB:WGDFF.OB) today announced financial results for the six-month and three-month periods ended June 30, 2007. The Company's financial statements were prepared in accordance with accounting principles generally accepted in the United States (US GAAP). Dollar amounts are expressed in U.S. dollars unless otherwise stated.
"Western Goldfields made significant progress in the first six months of 2007 toward bringing the Mesquite Mine into full production," reported Mr. Randall Oliphant, Chairman. "We have met all of our second-quarter milestones and we have brought forward anticipated full production by three months. Everything is now in place to make Mesquite a successful producing mine and to establish a platform for the growth of Western Goldfields."
"With the completion of the term loan facility for $105 million, the project is fully financed," continued Mr. Oliphant. "To secure the terms of the loan facility, we have executed flat forward gold sales contracts for approximately 40% of our expected gold production during the life of the loan at $801 per ounce."
"We have taken delivery of and commissioned six haul trucks and two shovels as part of our mine fleet," said Mr. Raymond Threlkeld, President and Chief Executive Officer. "Pre-stripping commenced in June, and we are planning for full production of 160,000-170,000 ounces of gold annually commencing in January 2008."
Financing Transactions
----------------------
In the first quarter of 2007, the Company completed a common share equity financing, which provided net proceeds of $59.2 million. On March 30, 2007, the Company entered into a term loan facility under which the Company will be able to borrow up to $105 million, of which $87.3 million is expected to be drawn for the development of Mesquite. The balance will be available for other corporate purposes until late 2009. In connection with this facility, the Company has entered into hedging contracts for the forward sale of 429,000 ounces of gold at a price of $801 per ounce during the period July 2008 to December 2014. On July 18, 2007, an initial draw of $20.4 million was received. These transactions complete the financing requirements for the development of the Mesquite Mine.
Corporate Reorganization
------------------------
Effective June 29, 2007, the Company's place of incorporation was changed from Idaho, USA to Ontario, Canada, and its name was changed from Western Goldfields, Inc. to Western Goldfields Inc. The reorganization allows the Company to take advantage of financial and other business opportunities that would not be available under its previous corporate structure.
As a result of the reorganization, the common shares in Western Goldfields, Inc. (the predecessor Idaho corporation) automatically converted into an equal number of common shares in Western Goldfields Inc. (the successor Ontario corporation) and the economic ownership of shareholders in the new company remained unchanged.
Mesquite Mine Development
-------------------------
Planned spending on the mining fleet is $73.3 million, of which approximately $37.6 million had been spent as at June 30, 2007. In addition to the mining fleet, the Company plans to spend approximately $35.3 million on other plant and infrastructure upgrades and expansion projects at Mesquite, of which approximately $6.3 million has been spent as at June 30, 2007.
Since the first quarter of 2007, Western Goldfields has been vigorously executing its expansion program at Mesquite. Accomplishments to date include:
- Leach pad expansion contract was awarded, liner material was ordered,
and the site preparation is well advanced;
- Two O&K RH340 45 cubic yard hydraulic shovels were delivered to the
site from Germany, commissioning is complete and the units are now in
service;
- Six Terex 205-ton haul trucks have been delivered to the site, have
been commissioned and are now engaged in pre-stripping operations;
- Eight more trucks are on schedule for delivery by year-end;
- Despite the global shortage of mining truck tires, a full inventory of
tires for the initial fleet is now on site and additional tires are
being delivered to establish inventory;
- New truck maintenance building has been ordered and site preparation
is well advanced;
- Various site reclamation activities have been completed, including
regulatory approval of the Vista heap leach pad closure and the
removal and salvage of redundant facilities; and
- All planned senior mine staff positions have been filled with highly
qualified individuals.
Financial Results
-----------------
Western Goldfields reports a net loss to common shareholders for the six months ended June 30, 2007 of $6.6 million, or $0.06 per share (basic and diluted), and for the three months ended June 30, 2007 of $4.0 million, or $0.04 per share. The net loss to common shareholders for the six months ended June 30, 2006, was $6.4 million, or $0.11 per share (basic and diluted), and for the three months ended June 30, 2006, was $2.6 million, or $0.04. Gold sales for the six months ended June 30, 2007 were 4,225 ounces and for the three months ended June 30, 2007 were 2,350 ounces. Gold sales for the six months ended June 30, 2006 were 8,375 ounces and for the three months ended June 30, 2006 were 2,275 ounces. These operating losses are consistent with the Company's plans during its startup period.
Liquidity and Capital Resources
-------------------------------
At June 30, 2007, the Company's available cash balance was $18.8 million, restricted cash was $7.5 million and working capital was $11.5 million. This represents a significant improvement in the Company's financial position since December 31, 2006 when it reported cash of $5.5 million and working capital $4.6 million. The improved liquidity is due primarily to the equity offering of common shares in the first quarter of 2007 which raised net proceeds of $59.2 million. Liquidity was also improved through the conversion of warrants and the exercise of stock options for proceeds of $2.3 million. In addition, the Company has $105 million of available capacity under the term loan facility.
Western Goldfields Inc.
-----------------------
Western Goldfields is a gold producer focused on completing the expansion of its Mesquite Mine, located in Imperial County, California, and returning the mine to full production. With a 2.8 million ounce gold reserve, the Company is the only multi-million ounce US gold reserve not controlled by a major gold company. The Company is fully permitted and fully funded, and estimates production of 160,000-170,000 ounces of gold annually. In June 2007, Western Goldfields announced that its production schedule has been moved ahead by one full quarter, which will bring the company into full production by January 2008. Western Goldfields Inc. is listed on the Toronto Stock Exchange and trades under the symbol WGI, and is quoted on the OTCBB under the symbol WGDFF.OB. For further details regarding the mineral reserves and mineral resources at Mesquite, please visit www.westerngoldfields.com.
Further Information
-------------------
For further information about the financial results of the Company, see the unaudited interim financial statements of the Company for the six months ended June 30, 2007 and the related management's discussion and analysis, which will be filed on Form 10-QSB with the U.S. Securities and Exchange Commission and the applicable Canadian securities regulatory authorities and will be available under the profile of the Company on EDGAR and SEDAR.
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, timing and costs to recommence commercial production, economic viability of the Mesquite Mine, production and cost estimates, financing options, including entering into a debt financing arrangement, and the consequences thereof, potential contractual arrangements, receipt of working capital, anticipated revenues, exercise of outstanding warrants, and capital and operating expenditures. 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, 2006 filed with the U.S. Securities and Exchange 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.
WESTERN GOLDFIELDS INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2007 2006
------------- -------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 18,750,186 $ 5,502,535
Restricted Cash 7,500,000 -
Receivables 147,352 223,507
Inventories 551,554 511,663
Prepaid expenses 763,127 841,636
------------- -------------
TOTAL CURRENT ASSETS 27,712,219 7,079,341
------------- -------------
Property, plant, and equipment, net of
accumulated amortization 41,862,081 4,328,512
Construction in progress 7,963,092 2,880,775
Gain on mark-to-market of gold hedging
contracts 758,877 -
Investments - reclamation and remediation 8,448,953 6,337,006
Long-term deposits 338,371 329,146
Long-term prepaid expenses 1,634,993 1,009,555
Deferred debt issuance/stock offering costs 3,318,806 250,000
------------- -------------
TOTAL OTHER ASSETS 64,325,173 15,134,994
------------- -------------
TOTAL ASSETS $ 92,037,392 $ 22,214,335
------------- -------------
------------- -------------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 12,554,211 $ 1,663,080
Accounts payable to related party 25,387 31,165
Accrued expenses 3,364,577 835,740
Accrued agency and commitment fees 241,250 -
------------- -------------
TOTAL CURRENT LIABILITIES 16,185,425 2,529,985
------------- -------------
LONG-TERM LIABILITIES
Reclamation and remediation liabilities 4,825,645 4,805,473
------------- -------------
TOTAL LIABILITIES 21,011,070 7,335,458
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, of no par value, unlimited
shares authorized; 117,221,002 and
78,452,876 shares issued and outstanding,
respectively 95,664,291 32,884,798
Share subscription receivable (150,000) -
Stock options and warrants 7,841,063 7,674,270
Accumulated deficit (32,318,943) (25,678,233)
Accumulated other comprehensive income (10,089) (1,958)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 71,026,322 14,878,877
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 92,037,392 $ 22,214,335
------------- -------------
------------- -------------
WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ---------------------------
2007 2006 2007 2006
-------------- ------------- ------------- -------------
REVENUES
Revenues from
gold sales $ 1,546,073 $ 2,104,315 $ 2,778,877 $ 4,878,943
-------------- ------------- ------------- -------------
COST OF GOODS SOLD
Mine operating
costs 2,662,308 1,892,336 4,569,386 3,871,503
Mine site
administration 681,925 348,813 1,112,824 676,595
Selling,
transportation,
and refining 6,252 7,534 11,627 16,876
Amortization and
accretion 377,210 335,030 752,318 647,244
Royalties 59,423 80,383 104,360 183,243
Inventory
adjustment 115,310 9,242 (19,351) 312,210
-------------- ------------- ------------- -------------
3,902,428 2,673,338 6,531,164 5,707,671
-------------- ------------- ------------- -------------
GROSS PROFIT
(LOSS) (2,356,355) (569,023) (3,752,287) (828,728)
-------------- ------------- ------------- -------------
EXPENSES
General and
administrative 1,137,758 1,105,652 2,222,490 2,175,604
Stock based
compensation 820,388 730,231 1,288,554 1,770,156
Exploration 748,594 272,260 1,031,926 711,217
-------------- ------------- ------------- -------------
2,706,740 2,108,143 4,542,970 4,656,977
-------------- ------------- ------------- -------------
OPERATING LOSS (5,063,095) (2,677,166) (8,295,257) (5,485,705)
-------------- ------------- ------------- -------------
OTHER INCOME
(EXPENSE)
Interest income 524,750 86,367 1,042,253 178,614
Interest expense (839) - (839) (20,434)
Agency and
commitment fees (241,250) - (241,250) -
Amortization of
deferred debt
issuance costs (109,544) - (109,544) -
Gain on
extinguishment
of debt - - - 142,949
Gain on
mark-to-market
of gold hedging
contracts 758,877 - 758,877 -
Gain on foreign
exchange 124,200 - 205,050 -
Loss on sale of
assets - (18,837) - (18,837)
Expenses of
Romarco merger
termination - - - (1,225,000)
-------------- ------------- ------------- -------------
1,056,194 67,530 1,654,547 (942,708)
-------------- ------------- ------------- -------------
LOSS BEFORE
INCOME TAXES (4,006,901) (2,609,636) (6,640,710) (6,428,413)
INCOME TAXES - - - -
-------------- ------------- ------------- -------------
NET LOSS (4,006,901) (2,609,636) (6,640,710) (6,428,413)
PREFERRED STOCK
DIVIDENDS - (4,479) - (16,979)
-------------- ------------- ------------- -------------
NET LOSS TO
COMMON
STOCKHOLDERS (4,006,901) (2,614,115) (6,640,710) (6,445,392)
OTHER
COMPREHENSIVE
INCOME
Foreign currency
translation
adjustment (2,874) (4,322) (8,131) (3,813)
-------------- ------------- ------------- -------------
NET COMPREHENSIVE
LOSS $ (4,009,775) $ (2,613,958) $ (6,648,841) $ (6,432,226)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
BASIC AND DILUTED
NET LOSS PER
SHARE $ (0.04) $ (0.04) $ (0.06) $ (0.11)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES
OUTSTANDING 113,641,025 62,389,376 108,240,372 56,025,181
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ---------------------------
2007 2006 2007 2006
-------------- ------------- ------------- -------------
CASH FLOWS FROM
OPERATING
ACTIVITIES
Net loss $ (4,006,901) $ (2,609,636) $ (6,640,710) $ (6,428,413)
Adjustments to
reconcile net
loss to net
cash provided
(used) by
operating
activities:
Amortization
and
depreciation 297,671 274,000 592,407 529,509
Amortization of
deferred debt
issuance costs 109,544 - 109,544 -
Accretion
expense 84,294 58,868 168,588 117,735
Loss on sale of
assets and
investments - 18,837 - 18,837
Interest on
investments -
reclamation and
remediation (86,644) (67,749) (170,269) (151,696)
Common stock
issued for
exploration
assets and
services - - - 136,500
Stock based
compensation 820,388 730,232 1,288,554 2,003,157
Gain on mark-to-
market of gold
hedging
contracts (758,877) - (758,877) -
Changes in assets
and liabilities:
Decrease (increase)
in:
Restricted
cash (7,500,000) - (7,500,000) -
Accounts
receivable 174,147 (7,459) 76,155 (11,010)
Inventories 31,405 (44,146) (39,891) 229,213
Prepaid
expenses (369,126) 50,286 (546,929) 103,719
Long term
deposits (5,938) (2,385) (9,224) (4,872)
Increase (decrease)
in:
Accounts
payable (158,672) (354,565) (948,783) (171,865)
Accounts payable
- related
parties 5,138 118,201 (5,778) 118,201
Accrued
expenses (794,623) 215,461 200,559 322,255
Accrued expenses
- related
parties - - - (45,835)
Accrued interest
expense - - - (48,695)
Accrued agency
and commitment
fees 241,250 - 241,250 -
-------------- ------------- ------------- -------------
Net cash provided
(used) by
operating
activities (11,916,944) (1,620,056) (13,943,404) (3,283,260)
-------------- ------------- ------------- -------------
CASH FLOWS FROM
INVESTING
ACTIVITIES
Purchase of
property &
equipment,
including
construction
in progress (25,661,610) (146,474) (31,376,510) (387,779)
Increase in
reclamation and
remediation
investment (2,090,094) - (2,090,094) -
-------------- ------------- ------------- -------------
Net cash provided
(used) by
investing
activities (27,751,704) (146,474) (33,466,604) (387,779)
-------------- ------------- ------------- -------------
CASH FLOWS FROM
FINANCING
ACTIVITIES
Principal
payments on
loan - - - (2,205,186)
Deferred debt
issuance costs (520,516) - (850,073) -
Common stock
issued for cash 1,005 - 59,191,196 4,012,000
Warrants issued
for cash - - - 1,988,000
Exercise of options
to purchase
common stock 355,558 3,650,250 500,983 3,650,250
Exercise of
warrants to
purchase
common stock 1,436,172 - 1,815,552 -
Preferred stock
dividends - (51,354) - (51,354)
-------------- ------------- ------------- -------------
Net cash provided
(used) by
financing
activities 1,272,220 3,598,896 60,657,658 7,393,710
-------------- ------------- ------------- -------------
Change in cash (38,396,428) 1,832,366 13,247,651 3,722,671
Cash, beginning
of period 57,146,614 1,942,692 5,502,535 52,387
-------------- ------------- ------------- -------------
Cash, end of
period $ 18,750,186 $ 3,775,058 $ 18,750,186 $ 3,775,058
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
SUPPLEMENTAL CASH
FLOW DISCLOSURES:
Interest paid $ 839 $ 69,430 $ 839 $ 69,430
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
NON-CASH FINANCING
AND INVESTING
ACTIVITIES:
Stock, options
and warrants
issued for
services $ 820,388 $ 730,232 $ 1,288,554 $ 2,003,157
Exploration fees
and assets paid
by issuance of
stock $ - $ - $ - $ 136,500
Equipment purchases
included in
accounts
payable $ 11,831,783 $ - $ 11,831,783 $ -
Deferred debt
issuance costs
included in
accrued
expenses $ 2,016,277 $ - $ 2,328,277 $ -
--------------------------------------------------------------------------------
Source: Western Goldfields, Inc.
Western Goldfields Announces Second Quarter Results
Wednesday August 1, 9:30 am ET
- All second-quarter milestones achieved to bring Mesquite Mine into full production
- Term loan facility and related gold forward sales contracts in place
- Mine fleet deliveries and construction program on schedule
- Pre-strip mining commenced June 2007
- Full production expected January 2008
TORONTO, Aug. 1 /PRNewswire-FirstCall/ - Western Goldfields Inc. (TSX:WGI, OTC BB:WGDFF.OB) today announced financial results for the six-month and three-month periods ended June 30, 2007. The Company's financial statements were prepared in accordance with accounting principles generally accepted in the United States (US GAAP). Dollar amounts are expressed in U.S. dollars unless otherwise stated.
"Western Goldfields made significant progress in the first six months of 2007 toward bringing the Mesquite Mine into full production," reported Mr. Randall Oliphant, Chairman. "We have met all of our second-quarter milestones and we have brought forward anticipated full production by three months. Everything is now in place to make Mesquite a successful producing mine and to establish a platform for the growth of Western Goldfields."
"With the completion of the term loan facility for $105 million, the project is fully financed," continued Mr. Oliphant. "To secure the terms of the loan facility, we have executed flat forward gold sales contracts for approximately 40% of our expected gold production during the life of the loan at $801 per ounce."
"We have taken delivery of and commissioned six haul trucks and two shovels as part of our mine fleet," said Mr. Raymond Threlkeld, President and Chief Executive Officer. "Pre-stripping commenced in June, and we are planning for full production of 160,000-170,000 ounces of gold annually commencing in January 2008."
Financing Transactions
----------------------
In the first quarter of 2007, the Company completed a common share equity financing, which provided net proceeds of $59.2 million. On March 30, 2007, the Company entered into a term loan facility under which the Company will be able to borrow up to $105 million, of which $87.3 million is expected to be drawn for the development of Mesquite. The balance will be available for other corporate purposes until late 2009. In connection with this facility, the Company has entered into hedging contracts for the forward sale of 429,000 ounces of gold at a price of $801 per ounce during the period July 2008 to December 2014. On July 18, 2007, an initial draw of $20.4 million was received. These transactions complete the financing requirements for the development of the Mesquite Mine.
Corporate Reorganization
------------------------
Effective June 29, 2007, the Company's place of incorporation was changed from Idaho, USA to Ontario, Canada, and its name was changed from Western Goldfields, Inc. to Western Goldfields Inc. The reorganization allows the Company to take advantage of financial and other business opportunities that would not be available under its previous corporate structure.
As a result of the reorganization, the common shares in Western Goldfields, Inc. (the predecessor Idaho corporation) automatically converted into an equal number of common shares in Western Goldfields Inc. (the successor Ontario corporation) and the economic ownership of shareholders in the new company remained unchanged.
Mesquite Mine Development
-------------------------
Planned spending on the mining fleet is $73.3 million, of which approximately $37.6 million had been spent as at June 30, 2007. In addition to the mining fleet, the Company plans to spend approximately $35.3 million on other plant and infrastructure upgrades and expansion projects at Mesquite, of which approximately $6.3 million has been spent as at June 30, 2007.
Since the first quarter of 2007, Western Goldfields has been vigorously executing its expansion program at Mesquite. Accomplishments to date include:
- Leach pad expansion contract was awarded, liner material was ordered,
and the site preparation is well advanced;
- Two O&K RH340 45 cubic yard hydraulic shovels were delivered to the
site from Germany, commissioning is complete and the units are now in
service;
- Six Terex 205-ton haul trucks have been delivered to the site, have
been commissioned and are now engaged in pre-stripping operations;
- Eight more trucks are on schedule for delivery by year-end;
- Despite the global shortage of mining truck tires, a full inventory of
tires for the initial fleet is now on site and additional tires are
being delivered to establish inventory;
- New truck maintenance building has been ordered and site preparation
is well advanced;
- Various site reclamation activities have been completed, including
regulatory approval of the Vista heap leach pad closure and the
removal and salvage of redundant facilities; and
- All planned senior mine staff positions have been filled with highly
qualified individuals.
Financial Results
-----------------
Western Goldfields reports a net loss to common shareholders for the six months ended June 30, 2007 of $6.6 million, or $0.06 per share (basic and diluted), and for the three months ended June 30, 2007 of $4.0 million, or $0.04 per share. The net loss to common shareholders for the six months ended June 30, 2006, was $6.4 million, or $0.11 per share (basic and diluted), and for the three months ended June 30, 2006, was $2.6 million, or $0.04. Gold sales for the six months ended June 30, 2007 were 4,225 ounces and for the three months ended June 30, 2007 were 2,350 ounces. Gold sales for the six months ended June 30, 2006 were 8,375 ounces and for the three months ended June 30, 2006 were 2,275 ounces. These operating losses are consistent with the Company's plans during its startup period.
Liquidity and Capital Resources
-------------------------------
At June 30, 2007, the Company's available cash balance was $18.8 million, restricted cash was $7.5 million and working capital was $11.5 million. This represents a significant improvement in the Company's financial position since December 31, 2006 when it reported cash of $5.5 million and working capital $4.6 million. The improved liquidity is due primarily to the equity offering of common shares in the first quarter of 2007 which raised net proceeds of $59.2 million. Liquidity was also improved through the conversion of warrants and the exercise of stock options for proceeds of $2.3 million. In addition, the Company has $105 million of available capacity under the term loan facility.
Western Goldfields Inc.
-----------------------
Western Goldfields is a gold producer focused on completing the expansion of its Mesquite Mine, located in Imperial County, California, and returning the mine to full production. With a 2.8 million ounce gold reserve, the Company is the only multi-million ounce US gold reserve not controlled by a major gold company. The Company is fully permitted and fully funded, and estimates production of 160,000-170,000 ounces of gold annually. In June 2007, Western Goldfields announced that its production schedule has been moved ahead by one full quarter, which will bring the company into full production by January 2008. Western Goldfields Inc. is listed on the Toronto Stock Exchange and trades under the symbol WGI, and is quoted on the OTCBB under the symbol WGDFF.OB. For further details regarding the mineral reserves and mineral resources at Mesquite, please visit www.westerngoldfields.com.
Further Information
-------------------
For further information about the financial results of the Company, see the unaudited interim financial statements of the Company for the six months ended June 30, 2007 and the related management's discussion and analysis, which will be filed on Form 10-QSB with the U.S. Securities and Exchange Commission and the applicable Canadian securities regulatory authorities and will be available under the profile of the Company on EDGAR and SEDAR.
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, timing and costs to recommence commercial production, economic viability of the Mesquite Mine, production and cost estimates, financing options, including entering into a debt financing arrangement, and the consequences thereof, potential contractual arrangements, receipt of working capital, anticipated revenues, exercise of outstanding warrants, and capital and operating expenditures. 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, 2006 filed with the U.S. Securities and Exchange 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.
WESTERN GOLDFIELDS INC.
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2007 2006
------------- -------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ 18,750,186 $ 5,502,535
Restricted Cash 7,500,000 -
Receivables 147,352 223,507
Inventories 551,554 511,663
Prepaid expenses 763,127 841,636
------------- -------------
TOTAL CURRENT ASSETS 27,712,219 7,079,341
------------- -------------
Property, plant, and equipment, net of
accumulated amortization 41,862,081 4,328,512
Construction in progress 7,963,092 2,880,775
Gain on mark-to-market of gold hedging
contracts 758,877 -
Investments - reclamation and remediation 8,448,953 6,337,006
Long-term deposits 338,371 329,146
Long-term prepaid expenses 1,634,993 1,009,555
Deferred debt issuance/stock offering costs 3,318,806 250,000
------------- -------------
TOTAL OTHER ASSETS 64,325,173 15,134,994
------------- -------------
TOTAL ASSETS $ 92,037,392 $ 22,214,335
------------- -------------
------------- -------------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 12,554,211 $ 1,663,080
Accounts payable to related party 25,387 31,165
Accrued expenses 3,364,577 835,740
Accrued agency and commitment fees 241,250 -
------------- -------------
TOTAL CURRENT LIABILITIES 16,185,425 2,529,985
------------- -------------
LONG-TERM LIABILITIES
Reclamation and remediation liabilities 4,825,645 4,805,473
------------- -------------
TOTAL LIABILITIES 21,011,070 7,335,458
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, of no par value, unlimited
shares authorized; 117,221,002 and
78,452,876 shares issued and outstanding,
respectively 95,664,291 32,884,798
Share subscription receivable (150,000) -
Stock options and warrants 7,841,063 7,674,270
Accumulated deficit (32,318,943) (25,678,233)
Accumulated other comprehensive income (10,089) (1,958)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 71,026,322 14,878,877
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 92,037,392 $ 22,214,335
------------- -------------
------------- -------------
WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ---------------------------
2007 2006 2007 2006
-------------- ------------- ------------- -------------
REVENUES
Revenues from
gold sales $ 1,546,073 $ 2,104,315 $ 2,778,877 $ 4,878,943
-------------- ------------- ------------- -------------
COST OF GOODS SOLD
Mine operating
costs 2,662,308 1,892,336 4,569,386 3,871,503
Mine site
administration 681,925 348,813 1,112,824 676,595
Selling,
transportation,
and refining 6,252 7,534 11,627 16,876
Amortization and
accretion 377,210 335,030 752,318 647,244
Royalties 59,423 80,383 104,360 183,243
Inventory
adjustment 115,310 9,242 (19,351) 312,210
-------------- ------------- ------------- -------------
3,902,428 2,673,338 6,531,164 5,707,671
-------------- ------------- ------------- -------------
GROSS PROFIT
(LOSS) (2,356,355) (569,023) (3,752,287) (828,728)
-------------- ------------- ------------- -------------
EXPENSES
General and
administrative 1,137,758 1,105,652 2,222,490 2,175,604
Stock based
compensation 820,388 730,231 1,288,554 1,770,156
Exploration 748,594 272,260 1,031,926 711,217
-------------- ------------- ------------- -------------
2,706,740 2,108,143 4,542,970 4,656,977
-------------- ------------- ------------- -------------
OPERATING LOSS (5,063,095) (2,677,166) (8,295,257) (5,485,705)
-------------- ------------- ------------- -------------
OTHER INCOME
(EXPENSE)
Interest income 524,750 86,367 1,042,253 178,614
Interest expense (839) - (839) (20,434)
Agency and
commitment fees (241,250) - (241,250) -
Amortization of
deferred debt
issuance costs (109,544) - (109,544) -
Gain on
extinguishment
of debt - - - 142,949
Gain on
mark-to-market
of gold hedging
contracts 758,877 - 758,877 -
Gain on foreign
exchange 124,200 - 205,050 -
Loss on sale of
assets - (18,837) - (18,837)
Expenses of
Romarco merger
termination - - - (1,225,000)
-------------- ------------- ------------- -------------
1,056,194 67,530 1,654,547 (942,708)
-------------- ------------- ------------- -------------
LOSS BEFORE
INCOME TAXES (4,006,901) (2,609,636) (6,640,710) (6,428,413)
INCOME TAXES - - - -
-------------- ------------- ------------- -------------
NET LOSS (4,006,901) (2,609,636) (6,640,710) (6,428,413)
PREFERRED STOCK
DIVIDENDS - (4,479) - (16,979)
-------------- ------------- ------------- -------------
NET LOSS TO
COMMON
STOCKHOLDERS (4,006,901) (2,614,115) (6,640,710) (6,445,392)
OTHER
COMPREHENSIVE
INCOME
Foreign currency
translation
adjustment (2,874) (4,322) (8,131) (3,813)
-------------- ------------- ------------- -------------
NET COMPREHENSIVE
LOSS $ (4,009,775) $ (2,613,958) $ (6,648,841) $ (6,432,226)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
BASIC AND DILUTED
NET LOSS PER
SHARE $ (0.04) $ (0.04) $ (0.06) $ (0.11)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES
OUTSTANDING 113,641,025 62,389,376 108,240,372 56,025,181
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
WESTERN GOLDFIELDS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ---------------------------
2007 2006 2007 2006
-------------- ------------- ------------- -------------
CASH FLOWS FROM
OPERATING
ACTIVITIES
Net loss $ (4,006,901) $ (2,609,636) $ (6,640,710) $ (6,428,413)
Adjustments to
reconcile net
loss to net
cash provided
(used) by
operating
activities:
Amortization
and
depreciation 297,671 274,000 592,407 529,509
Amortization of
deferred debt
issuance costs 109,544 - 109,544 -
Accretion
expense 84,294 58,868 168,588 117,735
Loss on sale of
assets and
investments - 18,837 - 18,837
Interest on
investments -
reclamation and
remediation (86,644) (67,749) (170,269) (151,696)
Common stock
issued for
exploration
assets and
services - - - 136,500
Stock based
compensation 820,388 730,232 1,288,554 2,003,157
Gain on mark-to-
market of gold
hedging
contracts (758,877) - (758,877) -
Changes in assets
and liabilities:
Decrease (increase)
in:
Restricted
cash (7,500,000) - (7,500,000) -
Accounts
receivable 174,147 (7,459) 76,155 (11,010)
Inventories 31,405 (44,146) (39,891) 229,213
Prepaid
expenses (369,126) 50,286 (546,929) 103,719
Long term
deposits (5,938) (2,385) (9,224) (4,872)
Increase (decrease)
in:
Accounts
payable (158,672) (354,565) (948,783) (171,865)
Accounts payable
- related
parties 5,138 118,201 (5,778) 118,201
Accrued
expenses (794,623) 215,461 200,559 322,255
Accrued expenses
- related
parties - - - (45,835)
Accrued interest
expense - - - (48,695)
Accrued agency
and commitment
fees 241,250 - 241,250 -
-------------- ------------- ------------- -------------
Net cash provided
(used) by
operating
activities (11,916,944) (1,620,056) (13,943,404) (3,283,260)
-------------- ------------- ------------- -------------
CASH FLOWS FROM
INVESTING
ACTIVITIES
Purchase of
property &
equipment,
including
construction
in progress (25,661,610) (146,474) (31,376,510) (387,779)
Increase in
reclamation and
remediation
investment (2,090,094) - (2,090,094) -
-------------- ------------- ------------- -------------
Net cash provided
(used) by
investing
activities (27,751,704) (146,474) (33,466,604) (387,779)
-------------- ------------- ------------- -------------
CASH FLOWS FROM
FINANCING
ACTIVITIES
Principal
payments on
loan - - - (2,205,186)
Deferred debt
issuance costs (520,516) - (850,073) -
Common stock
issued for cash 1,005 - 59,191,196 4,012,000
Warrants issued
for cash - - - 1,988,000
Exercise of options
to purchase
common stock 355,558 3,650,250 500,983 3,650,250
Exercise of
warrants to
purchase
common stock 1,436,172 - 1,815,552 -
Preferred stock
dividends - (51,354) - (51,354)
-------------- ------------- ------------- -------------
Net cash provided
(used) by
financing
activities 1,272,220 3,598,896 60,657,658 7,393,710
-------------- ------------- ------------- -------------
Change in cash (38,396,428) 1,832,366 13,247,651 3,722,671
Cash, beginning
of period 57,146,614 1,942,692 5,502,535 52,387
-------------- ------------- ------------- -------------
Cash, end of
period $ 18,750,186 $ 3,775,058 $ 18,750,186 $ 3,775,058
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
SUPPLEMENTAL CASH
FLOW DISCLOSURES:
Interest paid $ 839 $ 69,430 $ 839 $ 69,430
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
NON-CASH FINANCING
AND INVESTING
ACTIVITIES:
Stock, options
and warrants
issued for
services $ 820,388 $ 730,232 $ 1,288,554 $ 2,003,157
Exploration fees
and assets paid
by issuance of
stock $ - $ - $ - $ 136,500
Equipment purchases
included in
accounts
payable $ 11,831,783 $ - $ 11,831,783 $ -
Deferred debt
issuance costs
included in
accrued
expenses $ 2,016,277 $ - $ 2,328,277 $ -
--------------------------------------------------------------------------------
Source: Western Goldfields, Inc.
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