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Westgold amasses intriguing $300m war chest

Updated: May 2

Westgold Resources has strengthened its financial standing by securing a $100 million revolving corporate facility. Credit: File

Westgold Resources has strengthened what was an already ridiculously-strong financial position, prompting intrigue around its next move after adding $100 million in firepower courtesy of a revolving corporate facility (RCF) with tier-one lenders, ING Bank and Societe Generale.

Coupled with the $217 million in cash and bullion the company says it already has in the bank after this financial year’s first quarter, it is now poised to move quickly on emerging opportunities … whatever they may be.

Under the terms of the agreement, the RCF may be utilised for general corporate purposes and has a three-year term. Importantly, no mandatory gold hedging is imposed on the facility, leaving Westgold free to take advantage of spot-price gold sales.

Westgold is fully funded to develop organic growth assets such as the Great Fingall mine at Cue. With a strong balance sheet and growing cash flows from our operations this new corporate facility provides an additional $100 million in additional firepower to move quickly on opportunities we see emerging. Westgold Resources managing director Wayne Bramwell

Bramwell did not expand on what those “opportunities” might be, but gaining access to a significant amount of potential funding leaves little doubt that the radar is up for a company that already has sound financial backing.

Late last month, gold hit an all-time high of $3173 per ounce, fuelled by investors ploughing funds into the gold safe haven amid the risk of an expanding war in the Middle East.

Gold’s record-breaking run in Australian dollar terms was topped off by a weakening dollar against the United State greenback, dipping to a 10-month low of US63.58 cents in September. The Aussie dollar is currently trading at US66c.

In a pivotal year for Westgold, the mid-tier gold miner has capped off three consecutive quarters of strong cash flow, boasting $217 million of cash and bullion at the end of the September quarter. The company says its free cashflow benefited from increased exposure to the gold spot price with fewer hedged ounces and was offset by reduced production, resulting from three mines moving to care and maintenance.

Late last month, management kicked off its installation of the decline into the historic Great Fingall mine. It has outlined production of 2.5 million tonnes of ore at about 5 grams per tonne gold for 383,000 ounces at an all-in sustaining cost of $1801 per ounce. It is expected to deliver more than 45,000 gold ounces per year once it reaches a steady state of operation over an eight-year mine life, with an initial investment of $30 million spread over the next two financial years.

The company is also in the throes of a $25 million exploration program on the back of increasing its combined mineral resource by 311,000 ounces earlier this year.

A total of 10 rigs are currently operating across its Murchison and Bryah operating centres in Western Australia, continuing an aggressive exploration campaign that recently produced figures including 15.98m at 12.26g/t gold from 129m at Bluebird, 12.91m going 12.47g/t from 78m at Paddy’s Flat and 45m grading 4.53g/t from 586m from Big Bell Deeps.

The company lays claim to a total mineral resource of 107 million tonnes at 2.39g/t gold for 8.3 million ounces and has also confirmed total ore reserves of 23 million tonnes at 2.68g/t gold for 2 million ounces.

At a time of tightening capital in the global financial market, Westgold finds itself in an enviable position with ample cash in the bank and a $100 million revolving credit facility at its fingertips. So, the question beckons –where, or on what, will it spend it?

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