September 2024 Quarterly Report
31 October 2024
ASX Release $1.4B merger lifts Westgold into ASX 200 Perth, Western Australia, 31 October 2024 Westgold Westgold is an agile ASX200 Resources Limited (ASX: WGX, ASX:TSX, OTCQX: WGXRF - Australian gold company.
Westgold or the Company) is pleased to report results for the With six operating mines and period ending 30 September 2024 (Q1 FY25).
combined processing capacity of ~7Mtpa across two of Western
| HIGHLIGHTS OPERATIONS Safety Performance Total Recordable Injury Frequency Rate (TRIFR) of 7.37 / million hours – an increase of ~8% as we integrate the Southern Goldfields Operations | |
| Q1 FY25 record gold production post Karora merger 77,369oz Au @ AISC of $2,422/oz during a transitional quarter including only 2 months Southern Goldfields production | |
| On Track for FY25 Guidance 400,000 to 420,000 ozpa @ AISC of $2,000 - $2,300 with ramp-up back ended in H2 FY25 | |
| EXPLORATION & RESOURCE DEVELOPMENT Seventeen drill rigs operating across portfolio | |
| Bluebird – South Junction Ore Reserve increased by 233% to 3.0Mt @ 2.8g/t Au for 277koz | |
| Updated Group Mineral Resource Estimate (+60% to 13.2Moz Au) and Ore Reserve (+69% to 3.3Moz Au) | |
| Impressive drill results from both the Murchison and Southern Goldfields: ■ 19.00m @ 13.44g/t Au from 24SJDD028 at South Junction (See ASX Announcement of 5 September 2024) ■ 4.00m @ 22.45g/t Au in hole WF440N1-01AR at Beta Hunt Fletcher Zone (See ASX Announcement of 21 August 2024) | |
| CORPORATE $1.4B Merger completed - Westgold listed on TSX and rejoins S&P/ASX 200 | |
| Closing cash, bullion, and liquid investments at 30 September of $103M and undrawn $100M Revolving Corporate Facility | |
| Final Dividend declared 1.25 cent per share fully franked | |
| Westgold remains 100% unhedged – offering full exposure to | |
| escalating gold price |
Australia’s most prolific gold regions – we have a clear vision and strategy to sustainably produce +500,000 ozpa from FY26/27.
This announcement is authorised for release to the ASX by the Board.
Investor Relations
Annette Ellis | IR Manager [email protected] +61 458 200 039
Media
Peter Knight | Communications Manager [email protected] +61 459 980 481
Westgold Resources Limited westgold.com.au Level 6, 200 St Georges Terrace ASX: WGX | TSX: WGX | OTC: WGXRF T: +61 8 9462 3400 Perth WA 6000 / PO Box 7068 ABN 60 009 260 306 E: [email protected] Cloisters Square WA 6850
Westgold Managing Director and CEO Wayne Bramwell commented:
“Q1 FY25 represents both a transformational and a transitional period for Westgold.
On 1 August Westgold completed a $1.4B merger with Karora Resources that has transformed Westgold into a 400,000+ ozpa, top five Australian gold producer. On 6 August we commenced trading on the Toronto Stock Exchange and in September, Westgold joined the ranks of S&P’s ASX200.
Six quarters of disciplined and sustained cash-build from our Murchison operations delivered free cash and drove the value in Westgold’s scrip that allowed us to complete the merger without a capital raise or debt draw down debt. Importantly at the end of the quarter, Westgold remained unhedged and debt free, with its $100M Revolving Corporate Facility undrawn.
The operating results for this quarter mark a transition in scale for Westgold and include three months of gold production from the Murchison operations, but only two months’ production from the Southern Goldfields. The expanded business delivered a record 77,369 ounces (~90koz normalised for a full quarter of Southern Goldfields production) at an AISC of $2,422/oz, generating $29M in net mine cashflow.
Our focus post-merger has been to rapidly identify, then address key risks and opportunities across the Southern Goldfields operations. Early activities include deploying additional safety and operational management to supplement the site teams and expedite remedial maintenance and upgrades in basic mine infrastructure (water, ventilation, power). These changes have had immediate positive impact on mine outputs at both Beta Hunt and Higginsville late in the quarter and will see productivity improve as each area is addressed.
Integration across the business continues and importantly, Westgold remains on track to meet our FY25 guidance. Production and cost guidance is geared to the second half of the year as Bluebird South-Junction ramps up to a run rate of more than 1Mtpa, Beta Hunt delivers consistent output of more than 2Mtpa run rate and mining commences at Great Fingall.
Westgold now has an extensive, pipeline of projects with a landholding of more than 3,200km2 across two of Australia’s most prolific gold regions. Drilling will unlock value and as planned we have rapidly mobilised additional drills to Beta Hunt and prioritised targets across Higginsville.
The 100 day integration plan will be complete during Q2 FY25 and we are confident in higher mine outputs and reduced costs across the business as these programmes are systematically rolled out and synergies delivered.”
ENDS
Executive Summary
Cash Position at 30 September 2024
Westgold closed the quarter with cash, bullion and liquid investments of $103M (see Figure 1Error! Reference source not found.). Notably, this result was net of the significant cash component and major once-off costs relating to the Company’s $1.4B merger with TSX listed Karora Resources Inc (Karora) during the period.
Costs relating to the transaction include $125M cash payment to Karora shareholders, $28M in change of control payments to Karora’s directors, executives and advisor fees.
Figure 1: Cash, Bullion, and Liquid Investments Movement – Q1 FY25
Notes
- Cash acquired of $32M from Karora on 1 August is net of the Macquarie debt repayment of $44M and Culico Metals and Kali Metals contributions of $11M.
- Operating Cash Flows includes:
- Southern Goldfields for August and September only
- Merger Costs of $153M relates to:
- $125M cash consideration paid to Karora Resources shareholders,
- $21M change of control payments to Karora’s Executives and Directors,
- $7M to advisors’ costs (legal, financial, taxation and corporate advisory).
Group Production Highlights – Q1 FY25
Westgold produced 77,369 ounces of gold in Q1 FY25, its highest quarterly gold production yet, returning net mine cashflow of $29M. This result was from three months of production from the Murchison (52,889 ounces) but only two months of production from the Southern Goldfields operations (24,480 ounces).
All-In Sustaining Cost (AISC) for the quarter was $2,422/oz (Q4 FY24 $2,041/oz).
The elevated costs in Q1 FY25 reflect the transitional nature of the quarter. In the Southern Goldfields production was impacted by the poor performance of the Pioneer Open Pit at Higginsville and lower than expected ounce production from Beta Hunt.
Capital growth projects continued to advance across the Group whilst the Fender underground at Cue transitioned to commercial production during the quarter.
Gold production (oz)
Figure 2: Westgold Quarterly Production (oz), Achieved Gold Price and AISC ($/oz)
Figure 3: Westgold Monthly AISC
The Company sold 72,202 oz of gold for the quarter achieving a record price of $3,723/oz, generating $269M in revenue. With Westgold free of any fixed forward sales contracts, the Company continues to offer shareholders full exposure to record spot gold prices.
Westgold’s operations generated $101M of mine operating cashflows with the achieved gold price $1,301/oz over AISC. AISC for Q1 FY25 of $187M (Q4 FY24 of $108M) was impacted by $65M in additional costs from the Southern Goldfields and Fender transitioning to commercial production.
Capital expenditure during Q1 FY25 of $58M (Q4 FY24 $64M) includes $39M investment in growth projects (Bluebird-South Junction and Big Bell expansions and the Great Fingall development), and upgrading processing facilities and infrastructure.
Investment in exploration and resource development of $14M for the quarter was focussed on Bluebird-South Junction and Starlight in the Murchison, and the Fletcher Zone and Two Boys underground in the Southern Goldfields.
The net mine cash inflow for Q1 FY25 was $29M (refer Table 1 under Group Performance Metrics).
Environmental, Social and Governance (ESG)
People
During the quarter female participation in the workforce increased from 12.5% to 14.6%. Family and medical leave guidelines were rolled out to the wider business, with a pleasing increase in men utilising paternal leave as either the primary or secondary carer.
Staff retention continued to improve, with record low turnover.
At the end of the quarter, Westgold employed 2,100 employees and contractors. Integration of the Southern Goldfields was a major focus as policies, procedures and processes were aligned.
Safety, Health, the Environment and Community
Westgold’s Murchison business achieved a 16.44% reduction in its key safety metric for the full FY24 financial year. With the integration of the Southern Goldfields assets, the Total Recordable Injury Frequency Rate (TRIFR) increased to 7.37 injuries per million hours worked, representing an increase of 7.59% quarter on quarter.
The business incurred two Lost Time Injuries, increasing the Lost Time Injury Frequency Rate (LTIFR) by 61.29% to 1.00. The High Potential Incident frequency decreased by 24.17% to 5.18. Significant Psychosocial Harm Events remains at 0.00.
One Significant Environmental Incident was recorded during the quarter with a pipeline break at the Higginsville processing facility resulting in a tailings spill. The spill was reported to the regulator and immediately remediated to minimise environmental impact.
Figure 4: Southern Goldfields integration led to a rise in TRIFR during Q1 FY25
Group Performance Metrics
Westgold’s quarterly physical and financial outputs for Q1 FY25 are summarised below. The Group operates across the Murchison and Southern Goldfields regions of Western Australia with the Murchison Operations incorporating four underground mines (Bluebird-South Junction, Starlight, Big Bell, and Fender) and three processing hubs (Fortnum, Tuckabianna and Bluebird).
Westgold’s merger with Karora Resources completed on 1 August 2024. The Karora assets are grouped and reported as Westgold’s Southern Goldfields operations – incorporating the Beta Hunt and Two Boys underground mines (Pioneer open pit closed in September) and two processing hubs (Higginsville and Lakewood).
Table 1: Westgold Q1 FY25 Performance
| Southern | ||||
|---|---|---|---|---|
| Physical Summary | Units | Murchison | Group | |
| Goldfields | ||||
| ROM - UG Ore Mined | t | 650,066 | 291,442 | 941,508 |
| UG Grade Mined | g/t | 2.4 | 2.3 | 2.4 |
| ROM - OP Ore Mined | t | - | 70,388 | 70,388 |
| OP Grade Mined | g/t | - | 2.1 | 2.1 |
| Ore Processed | t | 878,890 | 410,671 | 1,289,561 |
| Head Grade | g/t | 2.1 | 2.0 | 2.1 |
| Recovery | % | 90 | 92 | 90 |
| Gold Produced | oz | 52,889 | 24,480 | 77,369 |
| Gold Sold | oz | 49,813 | 22,389 | 72,202 |
| Achieved Gold Price | A$/oz | 3,723 | 3,723 | 3,723 |
| Cost Summary | ||||
| Mining | A$’M | 57 | 31 | 88 |
| Processing | A$’M | 32 | 21 | 53 |
| Admin | A$’M | 7 | 5 | 11 |
| Stockpile Movements | A$’M | 1 | (2) | (2) |
| Royalties | A$’M | 5 | 5 | 10 |
| Cash Cost (produced oz) | A$’M | 101 | 60 | 161 |
| Corporate Costs | A$’M | 3 | 1 | 4 |
| Sustaining Capital | A$’M | 17 | 5 | 23 |
| All-in Sustaining Costs | A$’M | 121 | 65 | 187 |
| All-in Sustaining Costs | A$/oz | 2,294 | 2,696 | 2,422 |
| Southern | ||||
|---|---|---|---|---|
| Physical Summary | Units | Murchison | Group | |
| Goldfields | ||||
| Notional Cashflow Summary | ||||
| Notional Revenue (produced oz) | A$’M | 197 | 91 | 288 |
| All-in Sustaining Costs | A$’M | (121) | (65) | (187) |
| Mine Operating Cashflow | A$’M | 76 | 26 | 101 |
| Growth Capital | A$’M | (34) | (5) | (39) |
| Plant and Equipment | A$’M | (11) | (8) | (19) |
| Exploration Spend | A$’M | (11) | (3) | (14) |
| Net Mine Cashflow | A$’M | 20 | 9 | 29 |
| Net Mine Cashflow | A$/oz | 369 | 367 | 368 |
Q1 FY25 Group Performance Overview
Westgold processed 1,289,561t (Q4 FY24 – 862,889t) of ore in total at an average grade of 2.1g/t Au (Q4 FY24
- 2.1g/t Au), producing 77,369oz of gold (Q4 FY24 – 52,795oz). Group AISC in Q1 FY25 was $187M (Q4 FY24 -
$108M). The $79M increase reflects the enlarged Westgold post-merger (Southern Goldfields $66M).
MURCHISON
Mining costs in the Murchison were $1,074/oz (Q4 FY25 $817/oz) coinciding with the Fender mine achieving commercial production on 1 July 2024.
Ore stockpiles built-up during Q4 FY24 as a result of atypical rainfall in the Murchison were processed in Q1 FY25. As Bluebird-South Junction ramps up from 500kt to >1Mtpa during the year, the current reliance on hauling comparatively lower-grade, stockpiled ore from Fortnum and Cue will reduce accordingly, improving both economic performance and gold production from the Murchison operations.
The Bluebird mill commenced planned maintenance on crushing and milling circuits in September to prepare the processing hub for higher throughputs and increased delivery of higher grade ore from an expanded Bluebird-South Junction in H2 FY25.
Total Capital expenditure of $45M, included Growth Capital ($34M) and Plant and Equipment ($11M) across the Murchison operations. Growth Capital related to planned expansions at Big Bell, Great Fingall development, Bluebird – South Junction and Starlight mine sites. Plant and Equipment capital related to Processing facilities ($5M), Paste plant ($5M) and Camp upgrades ($1M) during the quarter.
SOUTHERN GOLDFIELDS
Equipment, personnel availability, power, water and ventilation issues combined to impact mine production performance at Beta Hunt and Two Boys in August. These issues are being systematically addressed with operational outputs beginning to improve from October.
The Pioneer open pit at Higginsville ceased operations during the quarter. An estimated 1,000oz from the pit was unable to be recovered following failure of the eastern wall immediately following the final blast, impacting revenue for the quarter.
Total Capital Expenditure of $13M, included Growth Capital ($5M) and Plant and Equipment ($8M) across the Southern Goldfields operations relating to Beta Hunt mine, processing facilities and underground equipment.
Table 2: Q1 FY25 Group Mining Physicals
| Ore Mined | Mined Grade | Contained ounces | |
|---|---|---|---|
| Murchison | |||
| (‘000 t) | (g/t) | (Oz) | |
| Bluebird | 95 | 3.71 | 11,297 |
| Fender | 75 | 2.45 | 5,851 |
| Big Bell | 307 | 1.94 | 19,143 |
| Starlight | 174 | 2.67 | 14,936 |
| Ore Mined | Mined Grade | Contained ounces | |
| Southern Goldfields | |||
| (‘000 t) | (g/t) | (Oz) | |
| Beta Hunt | 250 | 2.36 | 18,949 |
| Two Boys | 42 | 2.58 | 3,464 |
| Pioneer OP | 70 | 2.12 | 4,786 |
| GROUP | 1,012 | 2.41 | 78,427 |
Table 3: Q1 FY25 Group Processing Physicals
| Ore Milled | Head Grade | Recovery | Gold Production | |
|---|---|---|---|---|
| Murchison | ||||
| (‘000 t) | (g/t) | (%) | (Oz) | |
| Bluebird | 91 | 3.74 | 93 | 10,149 |
| Fender | 87 | 2.36 | 86 | 5,677 |
| Open Pit & Low Grade1 | 171 | 0.95 | 86 | 4,480 |
| Bluebird Hub | 349 | 2.03 | 89 | 20,306 |
| Big Bell | 311 | 1.94 | 88 | 16,998 |
| Open Pit & Low Grade | 23 | 0.81 | 87 | 516 |
| Tuckabianna Hub | 334 | 1.86 | 87 | 17,514 |
| Starlight | 165 | 2.81 | 95 | 14,155 |
| Open Pit & Low Grade | 31 | 0.97 | 95 | 914 |
| Fortnum Hub | 196 | 2.52 | 95 | 15,069 |
| Ore Milled | Head Grade | Recovery | Q4 Gold Production | |
| Southern Operations | ||||
| (‘000 t) | (g/t) | (%) | (Oz) | |
| Beta Hunt | 202 | 2.31 | 92 | 13,893 |
| Lakewood Hub | 202 | 2.31 | 92 | 13,893 |
| Beta Hunt | 32 | 2.16 | 94 | 2,096 |
| Two Boys | 35 | 2.55 | 91 | 2,593 |
| Pioneer OP | 74 | 1.99 | 91 | 4,320 |
| Open Pit & Low Grade | 68 | 0.81 | 89 | 1,578 |
| Higginsville Hub | 209 | 1.73 | 92 | 10,587 |
| GROUP TOTAL | 1,290 | 2.06 | 90 | 77,369 |
1 Includes low grade ore mined at Big Bell and trucked to Bluebird
Operations Summary
Murchison
Figure 5: Murchison Location Map
- Bluebird – South Junction Underground Mine (Meekatharra)
The first South Junction stope was successfully fired in August, with stopes on PHO_1095 and BLU_1065 levels mined during the quarter. Production ramp up slowed temporarily due to equipment availability and resourcing issues, however these were resolved by the end of the quarter, with the stoping sequence re-established and production resuming at the planned rates.
Orders have been placed for additional mobile equipment to support the ramp up of production into H2 FY25, and the focus remains on the South Junction Decline and advancing to the next production SOU_1036 level to expand Bluebird’s production to a run rate of 1.2Mtpa in the second half of the financial year.
The Bluebird-South Junction mining complex is growing with the current expansion of mine outputs driven by the commencement of mining the South Junction lodes. This expansion has required investment into an upgrade in the primary ventilation system, the introduction of paste fill for full resource extraction and additional mobile equipment. Larger tonnages per vertical metre of advance will significantly improve the capital intensity of the mine once the initial capital investment phase has been completed.
- Bluebird Mill (Meekatharra)
The Bluebird-South Junction and Fender underground mines were primary sources of ore feed to the Bluebird processing hub. Plant throughput of ~349,000t was slightly lower (-5%) compared to the previous quarter due to planned maintenance. Work was carried out on crushing and milling components in preparation for the ramp up and higher tonnages of higher-grade ore from Bluebird – South Junction underground operations.
The works undertaken will increase the availability and reliability of the plant as ore production from Bluebird South-Junction ramps up from 500ktpa to a run rate of 1.2Mtpa in H2 FY25.
- Fender Underground Mine (Cue)
Production was steady throughout the quarter averaging 25kt per month and outperforming the project’s Ore Reserve in terms of ounces by 16%. Improvement in output was the result of focus on mine production efficiency and maintaining multiple stopes online. Fender continues to take advantage of synergies with Big Bell to ensure production forecast is achieved.
Westgold expects this trend to continue into the coming quarter as the remainder of the 175 level stopes are extracted. Accelerating the decline to bring online an additional production level on the 205L was also a priority during the reporting period.
- Big Bell Underground Mine (Cue)
Production from the cave was steady throughout the quarter averaging 102kt per month. High grade drawpoints in the 685S and 710N levels resulted in an improvement of mine grade from the previous quarter. Changes to the operating strategy have delivered an improvement in underground equipment availability and steadied production.