Westgold builds $247m stash as gold price runs riot
Wed April 24 2024
Westgold Resources has recorded its fifth consecutive quarter of cash build after lifting its past closing balance by $9 million to end the March period with $247 million worth of cash and bullion in the kitty.
According to its March quarterly report, the Mid West miner sold 47,035 gold ounces during the three-month period at a price of $3137 per ounce to generate $148 million in revenue.
The positive financial news comes after Westgold revealed plans to merge with TSX-listed Karora Resources this month in a move that could see the combined entity produce 400,000 ounces of gold per year from a combined 13 million-ounce resource and more than 3 million-ounce reserve.
While rainfall, operational issues and the decision to pause mining at Paddy’s Flat led to a dip in the company’s gold production in the March quarter, the merger will bring the renowned projects of Big Bell, Beta Hunt, the emerging Bluebird and the Great Fingall mine all under one banner.
Total all-in sustaining costs (AISC) for the reporting period decreased by 2 per cent down to $130 million due to the end of mining at Paddy’s Flat and cost benefits from Westgold’s clean energy transition project. The now-completed project sees all of its processing plants and underground mines operating from power supplied from four new hybrid power facilities at Tuckabianna, Big Bell, Fortnum and Bluebird.
Management says the company is now operating at the run rate required to achieve its targeted annualised savings of 38 million litres of diesel, 57,000 tonnes of carbon dioxide-equivalent emissions and an AISC reduction of $60 per ounce.
The company also expanded its in-house underground drilling capability with the addition of six underground drills to its fleet, bringing its total number of machines to 13. Management says the move will reduce costly reliance upon third-party contractors and give it operational flexibility.
Drilling at its Bluebird-South Junction project led to an updated mineral resource at the operation of 6.4 million tonnes at 3.1 grams per tonne gold for 827,000 ounces – an increase of more than 130 per cent.
The company’s Starlight underground mine produced more than 140,000 tonnes of ore at a grade of 2.6g/t gold for 11,700 ounces mined. Three underground diamond drills are operating at the site where there is a focus on the Nightfall target that remains open at depth and along strike.
Development of the Great Fingall project is on track, with the top ventilation drive completed and works for the primary ventilation circuit underway.
Last year, the board approved the return to operations at the site after management presented a conservative base case to produce 2.5 million tonnes of ore at about 5g/t gold for 383,000 ounces. It is expected to deliver more than 45,000 gold ounces a year once it reaches a steady state of operation, with an initial mine life of eight years and first ore scheduled for the first half of the 2025 financial year.
Despite a difficult quarter in terms of production, Westgold has maintained its positive cash flow momentum and significantly developed a raft of projects. The company points out that it remains debt-free and “fully-leveraged” to a rampaging gold price that is hovering at about $3582 an ounce in Australia today.
Source: https://thewest.com.au/