Wesdome 2010 Annual Report

safety growth
long-term sustainability
Setting the Stage

Kiena
for growth
WESDOME GOLD MINES LTD.
2010 ANNUAL REPORT
Eagle River

unhedged
responsibility

safety growth

performance
wesdome was created to provide investors a leveraged ContentS

Kiena
investment in gold and has been producing gold Message to Shareholders......................................... 2
2010 Highlights ...................................................... 4
continuously for over 20 years. the Company has put five Management’s Discussion and Analysis ................... 7
Management’s Responsibility for
mines into production since 1987 and is well-positioned Financial Statements ............................................. 24
Independent Auditors’ Report ............................... 25
for the next five years. wesdome survived through Consolidated Balance Sheets ................................ 26
Consolidated Statements of Income and
low gold price periods and thrived in higher Comprehensive Income ......................................... 27
Consolidated Statements of Shareholders’ Equity ... 28
gold price periods by focusing both short-term and Consolidated Statements of Cash Flows .................. 29
Eagle River
Notes to the Consolidated Financial Statements...... 31
long-term decisions on the pursuit of excellence in Reserves and Resources......................................... 43

Safety, Sustainability and Performance. this purpose- Corporate Information ........................................... 44

driven philosophy will continue to guide our Company
through the continued operation of its established
mining assets as well as through the exploration and
development of our next generation of mines.

unhedged
responsibility
WESDOME GOLD MINES LTD. 2010 ANNUAL REPORT WESDOME GOLD MINES LTD. 2010 ANNUAL REPORT 1

safety growth

performance
meSSage “Our large, strategically located

Kiena
to ShareholderS properties are proven gold
producers and continue to offer
significant untapped exploration
and development potential.”
In 2010, our company made a significant investment in exploration and new project development. Despite
achieving only modest production levels with respectable earnings, this investment extends our mines’ lives ~ donovan Pollitt
and sets the stage for an achievable and affordable growth profile moving forward.
In light of a very competitive acquisition market in the gold mining sector, the Company pursued a
strategy of organic growth by leveraging existing expertise and mining and milling infrastructure in our
Eagle River
own backyard. Our large, strategically located properties are proven gold producers and continue to offer
significant untapped exploration and development potential. This past year’s investment in drilling and
development resulted in a 70% increase in Proven and Probable reserves, and a 365% increase in Measured
and Indicated resources. This drilling was funded entirely by operating cash flow. We have an equally
aggressive drilling program designed for 2011.
In Ontario, the 811 zone at Eagle River generated some very high grade drilling results at depth. In 2010,
production came from lower grade portions of the mine while we developed a new decline to provide access
to this high grade at depth. Despite a 16-year mining history at Eagle River, almost all production has come
from above 500 metres depth – still very modest depths for underground gold mining.
We advanced our Mishi Project through a Preliminary Feasibility Study which demonstrates significant
incremental production potential with little capital at risk. We are developing this project immediately with
an initial 5-year mine plan. Perhaps more importantly, comprehensive compilation and resource modelling
indicates a much larger mineralized system than previously recognized. Ongoing drilling will progressively
examine the potential and economics of a much larger surface and underground mining scenario.
In Val d’Or, the Kiena mine continued its steady, efficient and safe operations. We commenced an
exploration drift to the Dubuisson discovery, have progressed steadily and will be in position to

unhedged
systematically drill it this year. We are confident it provides potential for significant production increases
at above average grades.
The Company continues to focus on increasing shareholders’ returns and improving longevity through
resource growth.
We forecast significant production growth in 2012 as the results of this year’s
investments start showing up at the mill. We are proud of our operating team
and congratulate them again on a job well done.
On behalf of the Board of Directors,

responsibility
Donovan Pollitt, P.Eng., CFA
President and CEO
March 22, 2011

2 WESDOME GOLD MINES LTD. 2010 ANNUAL REPORT WESDOME GOLD MINES LTD. 2010 ANNUAL REPORT 3

safety growth

performance
2010 highlightS

Kiena
k Proven and Probable reserves increase 70%
to 319,000 ounces
k measured and indicated resources increase 365%
to 629,000 ounces
Eagle River
k net income of $3.7 million or $0.04 per share
k Cash flow from operations of $21.1 million or
$0.21 per share
k eagle river drilling demonstrates increasing grades
and widths at depth
k Kiena achieves record safety milestone
k mishi Pit pre-feasibility study demonstrates
robust economics

unhedged
responsibility

safety growth

performance
long-termSetting the Stage
sustainability management’S

Kiena
for Safety & reSPonSibility diSCuSSion
and analySiS
Safety is our utmost responsibility. Zero underground
fatalities in over 20 years of underground mining is
our track record. although our operating teams have
achieved excellent safety records to date, tomorrow is
Eagle River
another day and we must be unrelenting in our vigilance,
training and communication.

unhedged
responsibility

management’S DiscUssiON AND ANALysis management’S DiscUssiON AND ANALysis

FOR THE YEAR ENDED DECEMBER 31, 2010 SELECTED ANNUAL INFORMATION

This Management’s Discussion and Analysis dated March 22, 2011 should be read in conjunction with Wesdome Gold Mines (in thousands except loss per common share) 2010 2009 2008
Ltd.’s (“Wesdome” or “the Company”) audited consolidated financial statements for the year ended December 31, 2010, and Total revenue $ 89,461 $ 103,536 $ 80,961
their related notes which have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). Net income 3,735 32,165 9,362
This Management’s Discussion and Analysis contains “forward-looking statements” that are subject to risk factors set out in the Income per common share 0.04 0.32 0.09
cautionary statement below. All figures are in Canadian dollars unless otherwise stated. Additional information on Wesdome Gold Total assets 155,145 143,255 115,384
Mines Ltd., including current and previous years’ Annual Information Forms (“AIF”) and other corporate information, can be found at Long term financial liabilities 13,462 11,997 14,316
www.wesdome.com or www.sedar.com. Wesdome trades on the Toronto Stock Exchange under the symbol “WDO”.

RESULTS OF OPERATIONS
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Three Months Ended Dec 31 Twelve Months Ended Dec 31
All statements, other than statements of historical fact, constitute “forward-looking statements” and are based on expectations, 2010 2009 2010 2009
estimates and projections as at the date of this MD&A. The words ”believe”, “expect”, “anticipate”, “plan”, “intend”, “continue”,
“estimate”, “may”, ”will”, “schedule” and similar expressions identify forward-looking statements. The Company cautions the Eagle River Mine
reader that such forward-looking statements involve known and unknown risks, uncertainties and other factors which may Tonnes milled 39,281 29,970 155,554 132,004
cause the actual results, performance or achievements of Wesdome to be materially different from the Company’s estimated Recovered grade (g/t) 7.9 13.0 7.3 14.3
future results, performance or achievements expressed or implied by the forward-looking statements and the forward-looking Production (oz) 10,004 12,503 36,712 60,754
statements are not guarantees of future performance. Factors that could cause results or events to differ materially from current Sales (oz) 10,000 15,000 40,000 56,300
expectations expressed or implied are inherent to the gold mining industry and include, but are not limited to, those discussed in Bullion inventory (oz) 8,793 12,081 8,793 12,081
the section entitled “Risks and Uncertainties”. The Company does not intend, and does not assume any obligation to update these Bullion revenue ($thousands) 14,013 17,543 50,690 62,649
forward-looking statements, whether as a result of new information, future events or results or otherwise except as required by Operating costs ($thousands) 10,760 7,650 34,700 28,273
applicable laws. Mine operating profit ($thousands) * 3,253 9,893 15,990 34,376
Gold price realized ($Cdn/oz) 1,399 1,168 1,266 1,112

OVERALL PERFORMANCE Kiena Mine Complex
Tonnes milled 84,751 89,536 285,527 302,034
The Company owns and operates the Eagle River gold mining operations in Wawa, Ontario and the Kiena Mine Complex in Val Recovered grade (g/t) 4.2 3.0 3.5 3.6
d’Or, Quebec. The Eagle River mine commenced commercial production January 1, 1996 and the Kiena mine August 1, 2006. Production (oz) 11,508 8,690 32,162 35,398
Sales (oz) 9,000 9,000 30,000 36,400
At December 31, 2010, the Company had working capital of $30.7 million. During the year ended December 31, 2010, cash flow Bullion inventory (oz) 4,113 1,951 4,113 1,951
from operations totalled $21.1 million, $19.6 million of capital investments in exploration, development and mining equipment Bullion revenue ($thousands) 12,621 10,515 38,693 40,621
were made and $2.0 million in dividends were paid. Net income for the year ended December 31, 2010, was $3.7 million. Operating costs ($thousands) 6,226 7,204 28,084 29,746
Mine operating profit ($thousands) * 6,395 3,311 10,609 10,875
In 2010, mining operations at the Eagle River mine were in a low grade sequence with recovered grades averaging about half Gold price realized ($Cdn/oz) 1,398 1,166 1,286 1,114
those of 2009. During this time development work to access the higher grade western portions of the mine was undertaken. Once
access is established at new depths the orebody will be developed for mining of higher grade material over the next three years. Total
We expect these better grades to come onstream in 2012. Production (oz) 21,512 21,193 68,874 96,152
Sales (oz) 19,000 24,000 70,000 92,700
Also, in 2010, the Company launched development programs for the Dubuisson Zone in Val d’Or and the Mishi open pit mine Bullion inventory (oz) 12,906 14,032 12,906 14,032
in Ontario. These new projects form the basis of the Company’s internal production growth prospects over the short and Bullion revenue ($thousands) 26,634 28,058 89,383 103,270
medium term. Operating costs ($thousands) 16,986 14,854 62,784 58,019
Mine operating profit ($thousands) * 9,648 13,204 26,599 45,251
Gold price realized ($Cdn/oz) 1,398 1,167 1,275 1,113

*The Company has included in this report certain non-GAAP performance measures, including mine operating profit and operating costs to applicable sales.These measures are
not defined under GAAP and therefore should not be considered in isolation or as an alternative to or more meaningful than, net income(loss) or cash flow from operating activities
as determined in accordance with GAAP as an indicator of our financial performance or liquidity. The Company believes that, in addition to conventional measures prepared in
accordance with GAAP, certain investors use this information to evaluate the Company’s performance and ability to generate cash flow.



Gold sales exceeded operating costs resulting in a mine operating profit, or gross margin, of $26.6 million. In addition to these direct FOURTH QUARTER
operating costs, additional costs, including royalty payments, corporate and general costs and interest costs totalled $5.0 million.
Wesdome’s production totalled 21,512 ounces. Sales during the quarter totalled $26.6 million with 19,000 ounces sold at an
At the Eagle River mine grades averaged 7.3 gAu/tonne in 2010 compared to 14.3 gAu/tonne in 2009. We were mining low grade average price of $1,398Cdn per ounce. The cost of sales, or cash cost, was $894Cdn per ounce.
portions of the mine while establishing access at deeper levels to the high grade western portion of the mine. Very encouraging drilling
results in this area served to increase Eagle River’s proven and probable mineral reserves 50%, net of depletion, compared to last year. The Eagle River mine produced 10,004 ounces of gold from 39,281 tonnes milled at an average recovered grade of 7.9 gAu/
More importantly, the quality of the reserves improved with the average diluted grade almost doubling to 15.0 gAu/tonne. This material tonne. Sales totalled 10,000 ounces at an average realized price of $1,399Cdn per ounce. Cost of sales, or cash cost, averaged
will start being introduced into the mining sequence in 2012. $1,076Cdn per ounce. Mine operating profit for the quarter was $3.3 million.

The Kiena mine produced 32,162 ounces of gold and posted a strong fourth quarter. Kiena continues to be a steady, efficient, lower The Kiena mine produced 11,508 ounces from 84,751 tonnes milled at an average recovered grade of 4.2 gAu/tonne. Sales
margin mine with a tremendous safety record and outstanding exploration potential. totalled 9,000 ounces at an average realized price of $1,398Cdn per ounce. Cost of sales, or cash cost, averaged $692Cdn per
ounce. With the combination of higher grades, throughput and gold prices the Kiena mine generated a mine operating profit,
Overall average operating costs rose to $897Cdn per ounce sold in 2010 compared to $626Cdn per ounce in 2009. The gross or gross margin, of $6.4 million.
margin declined to $378Cdn per ounce compared to $488Cdn per ounce in 2009. The difference is almost entirely related to
the mining of lower grade ore in the mine sequence at Eagle River. The average sales price increased 14.5% to $1,275Cdn from
$1,113Cdn in 2009. LIQUIDITY AND CAPITAL RESOURCES

In 2010, the Company started driving a one kilometre long exploration drift to the Dubuisson Zone, east of the Kiena mine. At December 31, 2010, the Company had working capital of $30.7 million, compared to $35.2 million at year-end 2009. The
Detailed drilling proposed for 2011 will establish size, continuity and mineability of this material. Positive results would offer Company invested $16.7 million in exploration and development, $0.7 million on exploration properties and $2.2 on capital
potential to generate production growth for our Val d’Or operations over the short to medium term. equipment for a total of $19.6 million, compared to $14.2 million in exploration and development, $0.8 million on the acquisition
of exploration properties and $4.2 million on capital equipment for a total of $19.2 million in 2009.
In Wawa, we completed a prefeasibility study for the Mishi Project located two kilometres west of the Eagle River mill. A 5-year
initial mine plan was developed which offers very attractive returns at current gold prices and very modest capital costs. We The Company’s inventory includes 12,906 ounces of gold bullion, a liquid asset with a market value of $18.1 million on
intend to generate initial production in the fourth quarter of 2011 pending successful completion and regulatory approval of key December 31, 2010.
preproduction activities. The successful initiation of production for Mishi is expected to generate significant incremental cost
savings for the Eagle River mine operations. The Company believes it has sufficient capital resources to cover its obligations, capital and operating costs going forward. On
April 30, 2010, the Company paid a dividend of $0.02 per share.
In 2010, we advanced our internal growth projects and developed access towards higher grade portions of our mines. Combined
with an aggressive drilling program we significantly increased our mineral reserves and resources, mine lives and advanced Production planned in 2011 should generate operating cash flow, even at gold prices well below those currently being realized.
growth projects.
The following table shows the timing of cash outflows relating to contractual obligations.

SUMMARY OF QUARTERLY RESULTS Payments Due by Period (in thousands)
2010 Contractual Obligations Total Less than1 year 1 – 2 years 3 – 5 years After 5 years
(in thousands except per share data) 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Equipment leases $ 3,273 $ 1,422 $ 1,653 $ 198 -
Total revenue $ 26,471 $ 20,869 $ 22,408 $ 19,713 Convertible debentures 12,142 765 11,377 - -
Net income (loss) 1,715 (584) 320 2,284 $ 15,415 $ 2,187 $ 13,030 $ 198 -
Earnings (loss) per share – basic and diluted 0.02 (0.00) 0.00 0.02

2009 TRANSACTIONS WITH RELATED PARTIES
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
Total revenue $ 28,218 $ 21,489 $ 30,209 $ 23,620 In fiscal 2010, the Company paid $13,500 in director’s fees (2009: $5,000) to a company whose managing partner is a director
Net income 13,162 3,610 7,817 7,576 of the Company, $36,440 in consulting fees at the Kiena mine (2009: $Nil) to a company whose president is a director of the
Earnings per share – basic and diluted 0.12 0.04 0.08 0.08 Company and $Nil (2009: $98,500) to a company whose president was an officer and director of the Company.

These transactions were in the normal course of operations and were measured at the exchange amounts.



CRITICAL ACCOUNTING ESTIMATES (iv) Significant estimates and assumptions, also those related to the recoverability of mining and exploration properties, include
estimated useful lives of equipment, valuation assumptions, determination as to whether costs are capitalized or expensed
(i) Mining properties, plant and equipment and stock compensation. While management believes that these estimates and assumptions are reasonable, actual results
In accordance with the Company’s accounting policies, amortization commences when a property is put into commercial could vary significantly.
production and is calculated on the units-of-production method over the expected economic life of the mine. Depreciation is
calculated once the asset is placed in service, using units-of-production method over its estimated useful life.
FINANCIAL INSTRUMENTS – DISCLOSURES AND PRESENTATION
Mineral reserve and mineral resource estimates are not precise and also depend on statistical inferences drawn from drilling
and other data, which may prove to be unreliable. Future production could differ radically from mineral reserve estimates for Financial instruments disclosures requires the Company to provide information about: a) the significance of financial instruments
the following reasons: for the Company’s financial position and performance and b) the nature and extent of risks arising from financial instruments to
which the Company is exposed during the period and at the balance sheet date, and how the Company manages those risks.
(a) Mineralization or formation could be different from those predicted by drilling, sampling and similar tests;
(b) The grade of mineral reserves may vary significantly from time to time and there can be no assurance that any particular Financial Instruments – Fair Values
level of gold may be recovered from the mineral reserves; Following is a table which sets out the fair values of recognized financial instruments using the valuation methods and assumptions
(c) Declines in the market price of gold may render the mining of some or all of the Company’s mineral reserves uneconomic; described below:
and
(d) Increase in costs may render the mining of some, or all, of the Company’s mineral reserves uneconomic. (in thousands) 2010 2009
Carrying Fair Carrying Fair
Any of these factors may require the Company to reduce its mineral reserve and mineral resource estimates, change its Value Value Value Value
production estimates or increase its costs. Changes in reserve quantities would cause corresponding changes in amortization Financial assets
expense in periods subsequent to the reserve revision, and could result in impairment of the carrying amount of property, Held-for-trading:
plant and equipment. Management conducts periodic reviews of its mineral properties to determine if write-downs are Cash and cash equivalents $ 22,806 $ 22,806 $ 23,702 $ 23,702
required. Restricted funds 2,420 2,420 2,588 2,588
Loans and receivables:
(ii) Reclamation and closure costs obligations Receivables 7,442 7,442 4,022 4,022
Environmental laws and regulations relating to the protection of the environment are continually changing and generally Available-for-sale:
becoming more restrictive. Wesdome has made, and intends to make in the future, expenditures to comply with such Marketable securities - - 211 211
laws and regulations. The Company has recorded a liability and corresponding asset for the fair value of obligations for
reclamation and closure costs. The Company estimates its future closure costs for the Eagle River mine, Mishi mine and the Financial Liabilities
mill to be $0.8 million with an additional $1.0 million for the Kiena complex. Other financial liabilities
Payables and accruals 12,938 12,938 7,322 7,322
(iii) Future income tax assets Convertible 7% debentures 10,072 11,696 9,483 11,122
Future income tax assets and liabilities are determined based on differences between the financial reporting and tax bases
of assets and liabilities and on unclaimed losses carried forward and are measured using the substantively enacted tax Determination of Fair Value
rates that will be in effect when the differences are estimated to reverse or losses are estimated to be utilized. A valuation The fair value of a financial instrument is the amount of consideration that would be agreed upon in an arm’s length transaction
allowance is recognized to the extent that the recoverability of future income tax assets is not considered more likely between willing parties. The Company uses the following methods and assumptions to estimate fair value of each class of financial
than not. The Company has future tax assets associated with its deductible temporary differences and non-capital loss instruments for which carrying amounts are included in the Consolidated Balance Sheet as follows:
carryforwards, which are available to reduce taxable income in the future.
Cash and cash equivalents and restricted cash – The carrying amounts approximate fair values due to the short maturity of
The Company evaluates the likelihood of using all or a portion of the deductible temporary differences and loss carryforwards these financial instruments.
based on expected future earnings, the utilization of the deductible temporary differences and the expiry of its loss
carryforwards. Based on this information, the Company determines the appropriate amount of income tax valuation Receivables – The carrying amounts approximate fair values due to the short maturity of these financial instruments.
allowance that is required to reduce the value of its total deductible temporary differences and loss carryforwards to an
amount which it estimates it can more likely than not utilize. As of the end of the current year, the Company determined that Marketable securities – The carrying amounts are measured at fair value with mark- to-market gains and losses excluded
it could more likely than not utilize a substantial portion of its tax loss carryforwards and deductible temporary differences from net income and included in other comprehensive income until such gains or losses are realized. At December 31, 2009,
based on expected future earnings and the expiry date of its loss carryforwards and, therefore, an income tax valuation marketable securities were valued using the quoted market price to reflect an unrealized gain of $68,000. At December 31,
allowance was not required. Any changes in estimates would affect the income tax expense on the consolidated statement of 2010, the Company had disposed of its holdings in marketable securities.
income and future tax assets on the consolidated balance sheets. If the actual amount differs from the current estimates, the
future tax value of these deductible temporary differences and loss carryforwards may change significantly and the Company Other financial liabilities – Payables and accruals, and the convertible 7% debentures are carried at amortized cost. The
may incur a non-cash tax expense. carrying amount of payables and accruals approximates fair value due to the short maturity of these financial instruments. The
fair value of the convertible 7% debentures is based on the quoted market price.



The fair value hierarchy for financial instruments measured at fair value is Level 1 for cash and cash equivalents, restricted cash 3) Credit Risk
and marketable securities. The Company does not have Level 2 or Level 3 inputs (Note 2). Credit risk is the risk of a financial loss to the Company if a customer or counterparty to a financial instrument fails
to meet its contractual obligation. The Company minimizes its credit risk by selling its gold exclusively to financial
Financial Risk Management institutions with forty-eight hour terms of settlement. The Company’s accounts receivable consist primarily of
The Company is exposed to a number of different risks arising from normal course business exposures, as well as the Company’s use government refunds and credits. The Company estimates its maximum exposure to be the carrying value of cash and
of financial instruments. These risk factors include: (1) market risks relating to commodity prices, foreign currency risk and interest cash equivalents, accounts receivable and funds held against standby letters of credit.
rate risk; (2) liquidity risk; and, (3) credit risk. The Board of Directors has overall responsibility for the establishment and oversight of
the Company’s risk management framework and establishes and monitors risk management policies to: identify and analyze the risks The Company manages credit risk by maintaining bank accounts with Schedule 1 Canadian banks and investing only in
faced by the Company; to set appropriate risk limits and controls; and to monitor risks and adherence to market conditions and the Guaranteed Investment Certificates. The Company’s cash is not subject to any external limitations.
Company’s activities.
Comprehensive Income
1) Market Risk Comprehensive income represents the change in equity of an enterprise during a period from transactions and other events
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future arising from non-owner sources including gains and losses arising on translation of self-sustaining foreign operations, gains and
performance of the business. The market price movements that could adversely affect the value of the Company’s losses from changes in fair value of available for sale financial assets and changes in the fair value of the effective portion of cash
financial assets and liabilities include commodity price risk, foreign currency exchange risk and interest rate risk. flow hedging instruments.

(a) Commodity price risk
The Company’s financial performance is closely linked to the price of gold which is impacted by world economic events RISKS AND UNCERTAINTIES
that dictate the levels of supply and demand. The Company had no gold price hedge contracts in place as at or during
the year ended December 31, 2010. The operations of the Company are speculative due to the high risk nature of its business which is the operation, exploration and
development of mineral properties. In addition to risks described elsewhere herein, shareholders should note the following:
(b) Foreign currency exchange risk
The Company’s revenue is exposed to changes in foreign exchange rates as the Company’s primary product, gold, is Nature of Mineral Exploration
priced in U.S. dollars. The Company had no forward exchange rate contracts in place as at or during the year ended The exploration for and development of mineral deposits involves significant financial risks which even a combination of careful
December 31, 2010. evaluation, experience and knowledge may not eliminate. While the discovery of an orebody may result in substantial rewards, few
properties which are explored are ultimately developed into producing mines. Major expenses may be required to establish ore
(c) Interest rate risk reserves, to develop metallurgical processes and to construct mining and processing facilities at a site. It is impossible to ensure
Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in that the exploration programs planned by the Company will result in a profitable commercial mining operation.
market interest rates.
Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are the particular attributes
Financial assets and financial liabilities with variable interest rates expose the Company to cash flow interest rate of the deposit, such as size, grade and proximity to infrastructure, as well as metal prices which are highly cyclical and government
risk. The Company’s cash and cash equivalents include highly liquid investments that earn interest at market rates. regulations. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the
Fluctuations in market rates of interest do not have a significant impact on the Company’s results of operations due to Company not receiving an adequate return on invested capital.
the short term to maturity of the investments held.
Mining Risks and Insurance
2) Liquidity Risk The business of mining is generally subject to a number of risks and hazards, including environmental hazards, industrial
Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company manages accidents, labour disputes, encountering unusual or unexpected geologic formations, cave-ins, flooding and periodic interruptions
its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. The due to inclement or hazardous weather conditions. Such risks could result in damage to, or destruction of, mineral properties
Company believes it has access to sufficient capital through internally generated cash flows and equity and debt capital or producing facilities, personal injury, environmental damage, delays in mining, monetary losses and possible legal liability.
markets. Senior management is also actively involved in the review and approval of planned expenditures. Insurance against environmental risks (including potential for pollution or other hazards as a result of disposal of waste products
occurring from exploration and production) is not generally available to the Company or to other companies within the industry.
The following table shows the timing of cash outflows relating to trade payables and accruals, capital leases and
convertible debentures: Government Regulations and Environmental Matters
The Company’s activities are subject to extensive federal, provincial and local laws and regulations controlling not only the
(in thousands) <1 Year 1-2 Years 3-5 Years Over 5 Years mining of and exploration for mineral properties, but also the possible effects of such activities upon the environment. Permits
Payables & accruals $ 12,938 - - - from a variety of regulatory authorities are required for many aspects of mine operation and reclamation. Future legislation and
Mining taxes $ 1,317 - - - regulations could cause additional expense, capital expenditures, restrictions and delays in the development of the Company’s
Capital leases $ 1,422 $ 1,653 $ 198 - properties, the extent of which cannot be predicted. In the context of environmental permitting, including the approval of
Convertible debentures $ 765 $ 11,377 - - reclamation plans, the Company must comply with known standards, existing laws and regulations which may entail greater



or lesser costs and delays depending on the nature of the activity to be permitted and how stringently the regulations are Additional Funding Requirements
implemented by the permitting authority. While it is possible that the costs and delays associated with compliance with such laws, Further exploration on, and development of, the Company’s mineral resource properties, will require additional capital. In
regulations and permits could become such that the Company would not proceed with the development or operation of a mine, addition, a positive production decision on any of the Company’s development projects would require significant capital for
the Company is not aware of any material environmental constraint affecting its properties that would preclude the economic project engineering and construction. Accordingly, the continuing development of the Company’s properties will depend upon the
development or operation of any specific property. Company’s ability to either generate sufficient funds internally or to obtain financing through the joint venturing of projects, debt
financing, equity financing or other means. Although the Company has been successful in the past in obtaining financing through
In Ontario, the Company has obtained approval for its closure plan for the Eagle River mill, Eagle River mine and the Mishi- the sale of equity securities and the issuance of debt instruments, there can be no assurance that it will obtain adequate financing
Magnacon complex and has provided security of approximately $0.8 million to cover estimated rehabilitation and closure costs. In in the future.
Quebec, the Company has obtained approval for its closure plan for the Kiena mine and milling complex and has provided security
of approximately $1.0 million to cover estimated rehabilitation and closure costs. In the event of any future expansion or alteration
of a mine on the Eagle River property or the Kiena mine, the Company would likely be required to amend its closure plans and FUTURE ACCOUNTING CHANGES
could also be required to provide further security. The Company believes it is currently in compliance in all material respects with
the legislation described above. International Financial Reporting Standards (“IFRS”)
The Canadian Accounting Standards Board (“AcSB”) confirmed in February 2008 that (“IFRS”) will replace Canadian generally
Reliance on Management accepted (“GAAP”) for publicly accountable enterprises for financial periods beginning on and after January 1, 2011. Accordingly,
The Company is heavily reliant on the experience and expertise of its executive officers. If any of these individuals should cease to the Company will issue its first set of interim financial statements prepared under IFRS in the first quarter of 2011 including
be available to manage the affairs of the Company, its activities and operations could be adversely affected. comparative IFRS financial results and an opening balance sheet as at January 1, 2010 (the “transition date”). The first annual IFRS
consolidated financial statements will be prepared for the year ended December 31, 2011 with restated comparatives for the year
Economic Conditions ended December 31, 2010.
General levels of economic activity and recessionary conditions may have an adverse impact on the Company’s business.
The Company is proceeding with the transition from current Canadian GAAP to IFRS. The transition process consists of three
Mineral Resource and Mineral Reserve Estimates primary phases: scoping and diagnostic phase; impact analysis, evaluation and design phase; and implementation and
There are numerous uncertainties inherent in estimating mineral resources and mineral reserves, including many factors review phase.
beyond the Company’s control. Such estimation is a subjective process, and the accuracy of any mineral resources and • Scoping and diagnostic phase – A preliminary diagnostic review was completed at a high level which determined
mineral reserves estimate is a function of the quality of available data and of the assumptions made and judgements used in the financial reporting differences under IFRS and the key areas that may be impacted. The areas with the highest
engineering and geological interpretation. Differences between management’s assumptions, including economic assumptions potential impact were identified to include the basis of consolidation, impairment of assets, financial instruments
such as metal prices and market conditions, could have a material effect in the future on the Company’s financial position and and initial adoption of IFRS under the provisions of IFRS 1.
results of operations. • Analysis, quantification and evaluation phase – In this phase, each area identified from the scoping and diagnostic
phase is being addressed in order of descending priority. This phase involves specification of changes required
Competition to existing accounting policies, information systems and business processes, together with an analysis of policy
The mining industry is intensely competitive in all of its phases, and the Company competes with many companies possessing alternatives allowed under IFRS and development of draft IFRS financial statement content. The Company anticipates
greater financial resources and technical facilities in its search for, and the acquisition of, mineral properties as well as the that there will be changes in accounting policies and that these changes may materially impact the financial
recruitment and retention of qualified employees with technical skills and experience in the mining industry. There can be no statements. The full impact on future financial reporting has not been determined or estimated at this time.
assurance that the Company will be able to compete successfully with others in acquiring mineral properties, obtaining adequate • Implementation and review phase – This phase includes execution of any changes to information systems and
financing and continuing to attract and retain skilled and experienced employees. business processes and completing formal authorization processes to approve recommended accounting policy
changes. It will also include the collection of financial information necessary to compile IFRS-compliant financial
Conflicts of Interest statements and audit committee approval of IFRS financial statements.
Certain officers and directors of the Company are, or may be, associated with other companies that acquire interests in mineral
properties. Such associations may give rise to conflicts of interest from time to time. The directors are required by law to act Having completed the scoping and diagnostic phase finalization and approval of accounting policies and IFRS 1
honestly and in good faith with a view to the best interests of the Company and to disclose any interest which they may have in exemptions are underway. Preparation of the opening IFRS balance sheet is in progress. The Company has identified the
any project or opportunity of the Company. Not every officer or director devotes all of their time and attention to the affairs of areas that will be affected by the transition to IFRS.
the Company.

Insurance
The Company carries insurance to protect against certain risks in such amounts as it considers adequate. Risks not insured against
include environmental pollution, mine flooding or other hazards against which such companies cannot insure or against which
they may elect not to insure.



First Time Adoption (IFRS 1) Share-based Payments (IFRS 2)
IFRS 1 provides guidance to entities on the general approach to be taken when first adopting IFRS. The underlying principle of IFRS Per IFRS, the forfeiture rate, with respect to share options, needs to be estimated by the Company at the grant date instead of
1 is retrospective application of IFRS standards in force at the date an entity first reports using IFRS. IFRS 1 acknowledges that full recognizing the entire compensation expense and only record actual forfeitures as they occur. For graded-vesting features, IFRS
retrospective application may not be practical or appropriate in all situations and prescribes: requires each instalment to be treated as a separate share option grant, because each instalment has a different vesting period
• Optional exemptions from specific aspects of certain IFRS standards in the preparation of the Company’s opening and hence the fair value of each instalment will differ. The Company has considered the potential effect of share based payments
balance sheet; and under IFRS and has concluded that there will be no material impact on its financial statements on adoption of IFRS.
• Mandatory exceptions to retrospective application of certain IFRS standards.
Mineral Property Interest, Exploration and Evaluation Costs (IFRS 6)
Additionally, to ensure financial statements contain high-quality information that is transparent to users, IFRS 1 contains IFRS 6 applies to expenditures incurred on properties in the exploration and evaluation (“E&E”) phase, which begins when an entity
disclosure requirements to highlight changes made to financial statement items due to the transition to IFRS. obtains the legal rights to explore a specific area and ends when the technical feasibility and commercial viability of extracting a
mineral resource are demonstrable. IFRS 6 requires entities to select and consistently apply an accounting policy specifying which
The Company has elected to apply the following exemptions in its preparation of an opening IFRS statement of consolidated E&E expenditures are capitalized and which are expensed. Unlike IFRS, Canadian GAAP indicates that exploration costs may initially
financial position as at the transition date: be capitalized if the Company considers that such costs have the characteristics of property, plant and equipment. Exploration
• To apply IFRS 2 Share-Based Payments only to equity instruments that were issued after November 7, 2002 and had and evaluation assets shall be classified as either tangible or intangible according to the nature of the assets acquired. Under the
not vested by the transition date; and Company’s current accounting policy, acquisition costs of mineral properties, together with direct exploration and development
• To apply IFRS 3 Business Combinations prospectively from the transition date, therefore not restating business expenses incurred thereon are capitalized. The Company is currently in the process of determining the impact on its statements of a
combinations that took place prior to the transition date. change to its accounting policies.

In accordance with the requirements of IFRS 1, the Company will record transition adjustments where applicable against retained Income Taxes (IAS 12)
earnings as at January 1, 2010 for differences between our Canadian GAAP and IFRS accounting. Both Canadian GAAP and IFRS follow the liability method of accounting for income taxes, where tax liabilities and assets are
recognized on temporary differences. However, there are certain exceptions to the treatment of temporary differences under IFRS
Prior to reporting interim consolidated financial statements in accordance with IFRS for the year ending December 31, 2011, the that may result in an adjustment to Wesdome future tax liabilities and assets under IFRS. In addition the Company’s future tax
Company may decide to apply other optional exemptions contained in IFRS 1. liabilities and assets may be impacted by the tax effects of any other changes noted in the above areas. The Company is in the
process of analyzing the impact of IAS 12 on the consolidated financial statements.
Property, Plant and Equipment (IAS 16)
Under IFRS, the Company can elect to measure property, plant and equipment (“PP&E”) using either the cost model or the revaluation Convertible Debenture (IAS 32)
model. Canadian GAAP only accepts the cost model. The Company will not select the revaluation model due to the difficulty and Under Canadian GAAP the convertible notes were considered to have an embedded share purchase option which was valued
effort needed to determine the fair value. As a result, there will not be a significant impact on the Company’s financial statements on separately from the debt component and the value attributed to shareholders’ equity. Following assessment of the terms of the
adoption of IFRS. convertible notes under IFRS it was concluded that the embedded share purchase option should be classified as a derivative
liability. This change in accounting methodology impacts the classification and measurement of the instrument. The Company’s
On transition to IFRS, IFRS 1 allows the Company to record property, plant and equipment at fair value. This fair value becomes the existing approach complies with recognition and measurement of the instrument. There will be no material change on transition.
deemed cost of the asset for reporting under IFRS. The Company is planning to use this election for its equipment.
Subsequent Disclosures
Asset Retirement Obligation (IAS 37) Further disclosures of the IFRS transition process are expected as follows:
Unlike Canadian GAAP, IFRS uses the term decommissioning in place of asset retirement obligation (“ARO”) for legal or • The Company’s first consolidated financial statements prepared in accordance with IFRS will be the interim
constructive obligations to dismantle, remove and restore items of PP&E. IFRS requires discount rates reflect the specific risks consolidated financial statements for the three months ending March 31, 2011, which will include notes disclosing
involved in the decommissioning provision while under Canadian GAAP, discount rates are based on the Company’s credit transitional information and disclosure of new accounting policies under IFRS. These statements will also include
adjusted risk free rate. Under Canadian GAAP, the discount rate used to estimate the liability is not updated to current market 2010 consolidated financial statements for the comparative period, adjusted to comply with IFRS and the Company’s
discount rates, while under IFRS, the rate is updated at each reporting period. The Company has determined that there will not be transition date IFRS statement of financial position.
any significant impact on the consolidated financial statements resulting from this difference.
Information Systems
Impairment (IAS 36) IT implications were assessed with respect to additional information required under IFRS. No significant changes are expected to
IFRS requires a write down of assets if the higher of the fair market value and the value in use of a group of assets is less than operate the accounting system under IFRS.
its carrying value. Value in use is determined using discounted estimated future cash flows. Current Canadian GAAP requires
a write down to estimated fair value only if the undiscounted estimated future cash flows of a group of assets are less than its Internal Controls
carrying value. This approach is different than GAAP (i.e. one step model under IFRS compared to two step model under GAAP). Management is responsible for ensuring that processes are in place to provide them with sufficient knowledge to support their
IFRS also requires reversal of impairment losses (excluding goodwill) where previous adverse circumstances have changed; certification of the financial statements and MD&A, more specifically assessing that the SEDAR filings are presenting fairly the
this is prohibited under Canadian GAAP impairment testing which should be performed at the asset level for long-lived assets results of the Company. Management will make sure that once the convergence process is completed, it can still certify its filings.
and intangible assets. Where the recoverable amount cannot be estimated for individual assets, it should be estimated as part The Company does not expect to make a change that materially affects, or is reasonably likely to materially affect, the Company’s
of a Cash Generating Unit (“CGU”). The Company has determined that there will not be a material impact to its statements of ICFR in fiscal 2010 and 2011 due to the transition to IFRS.
accounting for impairment under IFRS.



Impact on the Business The Company’s management, with the participation of the CEO and CFO, assessed the effectiveness of the Company’s internal
The business processes of the Company are not expected to be effected significantly to operate under IFRS. The Company has controls over financial reporting and concluded that the change in segregation of duties resulted in a material change in the
no foreign currency transactions, no defined benefit pension plan, no hedging activities, no debt or capital covenants. The Company’s internal control over financial reporting during the year ended December 31, 2010. In making its assessment,
Company doesn’t expect that IFRS will have an impact on the requirements or business processes when it enters into flow-through management and the CEO and the CFO have determined that as at December 31, 2010, the Company’s internal control over
financing. The Company has no compensation arrangements that will be affected by the IFRS implementation. The Company’s financial reporting was effective.
Stock Option Plan is not affected by ratios or financial targets.
Limitations of Controls and Procedures
The International Accounting Standard Board currently has projects underway that are expected to result in new pronouncements The Company’s management, including the CEO and CFO, believe that any disclosure controls and procedures or internal control
and as a result, IFRS as at the transition date is expected to differ from its current form. The final impact of IFRS on the financial over financial reporting, no matter how well conceived and operated can provide only reasonable, not absolute, assurance
statements will only be determined once all applicable standards at the conversion date are known. that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative to their costs. Also, projections of any evaluation
Training and Communication of effectiveness to future periods are subject to the risk that any design will not succeed in achieving its stated goals under all
Key finance staff have attended and continue to attend various IFRS update and training courses. IFRS standard requirements potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due
have been communicated to other finance staff. to error or fraud may occur and not be detected.

SUMMARY OF SHARES ISSUED OUTLOOK

As of March 22, 2011, the Company’s share information is as follows: In 2011, we expect similar outputs from Kiena and Eagle River plus initial production from Mishi. This should put us over 70,000
Common shares issued 101,336,459 ounces for the year. Clarity on the contribution from Mishi will improve as regulatory requirements are met. We expect 2012 to be
Common share purchase options 1,796,700 a very strong year, perhaps our best ever, as grades rise at Eagle River and the first full year of Mishi kicks in. At Dubuisson drilling
will provide information to decide on further development potential.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Disclosure Controls and Procedures
In accordance with the requirements of National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim
Filings, the Company’s management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), have
evaluated the effectiveness of the Company’s disclosure controls and procedures. Based upon the results of that evaluation,
the Company’s CEO and CFO have concluded that as at December 31, 2010, the Company’s disclosure controls and procedures
to provide reasonable assurance that the information required to be disclosed by the Company in reports it files is recorded,
processed, summarized and reported within the appropriate time periods and forms were effective.

Internal Control over Financial Reporting
Internal control over financial reporting (“ICFR”) is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with applicable Canadian
GAAP. Internal control over financial reporting should include those policies and procedures that establish the following:
• Maintenance of records in reasonable detail, that accurately and fairly reflect the transactions and dispositions of
our assets;
• Reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with applicable Canadian GAAP;
• Receipts and expenditures are only being made in accordance with authorizations of management and the Board of
Directors; and
• Reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our
assets that could have a material effect on the financial instruments.


safety growth

performance
Setting the Stage for finanCialS

Kiena
SuStainability
in mining, sustainability encompasses minimizing one’s
ecological footprint, replacing and developing new
ore reserves and investing in the people who make it
happen. our properties, technical know-how, discipline
Eagle River
and track record are a testament to our commitment to
sustainable, long-term operations and our aim is to be
operating clean, safe mines well into the future.

unhedged
responsibility

MANAgEMENT’s REsPONsibiLiTy for finanCial StatementS indePendent AUDiTORs’ REPORT

The accompanying consolidated financial statements and all of the data included in this annual report have To the Shareholders of
been prepared by and are the responsibility of the management of the Company. The consolidated financial Wesdome Gold Mines Ltd.
statements have been prepared in accordance with accounting principles generally accepted in Canada and reflect
management’s best estimate and judgement based on currently available information.
We have audited the accompanying consolidated financial statements of Wesdome Gold Mines Ltd., which comprise
Management is also responsible for a system of internal control which is designed to provide reasonable assurance the consolidated balance sheets as at December 31, 2010 and 2009, the consolidated statements of income and
that assets are safeguarded, liabilities are recognized and that the accounting systems provide timely and accurate comprehensive income, shareholders’ equity and cash flows for the years then ended, and a summary of significant
financial reports. accounting policies and other explanatory information.

The Board of Directors is responsible for ensuring that management fulfils its responsibilities in respect of financial Management’s responsibility for the financial statements
reporting and internal control. The Audit Committee of the Board of Directors meets periodically with management Management is responsible for the preparation and fair presentation of these consolidated financial statements in
and the Company’s independent auditors to discuss auditing matters and financial reporting issues. In addition, the accordance with Canadian generally accepted accounting principles, and for such internal control as management
Audit Committee reviews the annual consolidated financial statements before they are presented to the Board of determines is necessary to enable the preparation of consolidated financial statements that are free from material
Directors for approval. misstatement, whether due to fraud or error.

The Company’s independent auditors, Grant Thornton LLP, are appointed by the shareholders to conduct an audit in Auditor’s responsibility
accordance with generally accepted auditing standards in Canada, and their report follows. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.
Toronto, Canada Donald D. Orr In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
March 22, 2011 Secretary-Treasurer and CFO presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our
audit opinion.

Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial
position of Wesdome Gold Mines Ltd. as at December 31, 2010 and 2009, and the results of its operations and its
cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

Toronto, Canada Chartered Accountants
March 22, 2011 Licensed Public Accountants


Wesdome 2010 Annual Report

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (18)

En vedette

En vedette (20)

Similaire à Wesdome 2010 Annual Report

Similaire à Wesdome 2010 Annual Report (20)

Wesdome 2010 Annual Report