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Westgold debt-free and cashed up for big 2024

Updated: May 2

Westgold Resources’ Tuckabianna hybrid power facility. operations. Credit: File

Perth-based Westgold Resources has finished the 2023 financial year debt-free and with $192 million in cash, bullion and liquid assets – and management says it is now fully funded to deliver on its FY24 objectives.

The 2023 financial year was a tale of two halves for the company. After two quarters of cash outflow, it rebounded with positive cashflow from the realisation of increased operating efficiency. Its large, fixed forward hedge book came to an end and stronger production, coupled with a rising gold price, boosted revenue.

The gold producer says its new leadership team initiated a reset of company culture, operational base and approach to cost management, unveiling a two-staged approach to shareholders. It was to stabilise and reset in the first half and realise profit in the second.

And the numbers revealed today suggest that it pretty much went to script.

Management says FY23 was a tough year, but necessary to ensure long-term growth. The company put three marginal underground mines on care and maintenance in the first half of the year as staff and equipment were redeployed to four other operating mines.

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 the three mines moving to care and maintenance. Management says it expects to earn an additional $4.4 million in revenue this month as a result.

FY23 was a turnaround year for Westgold. Our employees have leaned into the new direction, new culture and the values that underpin how we do business. There is still much to achieve but Westgold finishes FY23 in a strong financial position with $192M in cash, bullion and liquid assets. Importantly, the Group is fully funded to deliver its FY24 corporate objectives. Our vision for Westgold going forward is clear. To be a safer, progressive, socially responsible, highly profitable and cash generative gold miner with the aim of providing consistent returns to our shareholders. Westgold Resources non‐executive chair Cheryl Edwardes

In May this year, the company announced a 49 per cent increase to its Great Fingall gold deposit near Cue to 4.3 million tonnes at 4.3 grams per tonne giving 588,000 ounces.

Westgold then revealed earlier this month that based on continued positive drilling results, it had approved the development of Great Fingall mine, with a base case of 2.5 million tonnes of ore production at about 5g/t for 383,000 ounces of gold giving more than 45,000 ounces of production per year at an all-in sustaining cost (AISC) of $1801 per ounce.

The company says the initial mine life at Great Fingall is eight years and development will kick-off in the second quarter of next year. It expects to spend an average of about $30 million in the next two financial years.

In addressing gold production, Westgold unveiled a 2023/24 guidance of 245,000 to 265,000 gold ounces at an AISC of between $1800 and $2000 per ounce after hitting its target at the top end of production and mid-point of AISC in the past financial year.

Today’s gold price is hovering at about the $2962 per ounce mark.

Continued strong production from the company’s Blue Bird and Big Bell mines near Meekatharra underpinned an improvement in total ore processed at an increased grade.

In quarter four of the past financial year, Big Bell produced 290,000 tonnes of ore mined at 2.8g/t for 26,000 ounces and Bluebird produced 139,000 tonnes of ore mined at 4.3g/t for 19,000 ounces. Production at Bluebird peaked in May this year, with a new record of 49,000 tonnes at 4g/t for 6300 ounces for the month – up eight per cent from April.

The first of Westgold’s four hybrid power stations is also officially up-and-running at its Tuckabianna site, 20km east of Cue, replacing its existing diesel-powered facility. The hybrid facility includes a 6MW solar farm fitted with 11,088 photovoltaic panels, a battery energy storage system with 2.4MW capacity and a 9.5MW gas-fuelled power station for a total of 17.9MW.

The company says the planned 82MW, four-plant facility is expected to reduce its annual diesel fuel consumption by 38 million litres and lower annual carbon dioxide equivalent emissions by about 57,000 tonnes. It expects its AISC to reduce by some $60 per ounce due to the lower cost of energy provided by the new hybrid power facilities.

Westgold says the facilities are central to its clean-energy transition initiative, with the gas-fired power stations, battery storage and solar farms owned and operated by Pacific Energy under an electricity purchase agreement, and the gas provided by Clean Energy Fuels Australia under a gas supply agreement.

With a significant period of change behind it, Westgold has emerged as a successful and profitable gold producer.

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