As world gold prices hit new highs, Westgold Resources (ASX:WGX) has revealed a significant rise in forecast production and a drop in costs.
Much of the improvement will come from the $1.2 billion takeover of Karora, including its Beta Hunt Underground Mine and the Higginsville Gold Operations, which feature the Higginsville Open Pit mines and the 1.4Mtpa Higginsville mill.
In a statement to the ASX early Monday, Westgold said it now expects gold production to nearly double, reaching 400,000 to 420,000 ounces, compared to 2024's range of 220,000 to 240,000 ounces (with an actual output of 227,237 ounces).
The company stated it is targeting increased output as its Beta Hunt, Bluebird-South Junction, and Great Fingall mines ramp up production.
Its All-in Sustaining Cost (AISC) is forecast to fall to $A2,000–$A2,300 per ounce, down from $A2,100–$A2,300 per ounce in 2023–24 (with an actual AISC of $A2,178 per ounce). Westgold said the AISC would be higher in the December half-year but would decline in the final six months as production accelerates.
With world gold prices above $US2,600 an ounce and the Australian dollar price over $A3,800, Westgold has a healthy margin to protect by keeping costs under control.
After earning $95 million in the year to June (on an NPAT basis) and before the takeover, Westgold’s earnings could potentially surpass $200 million in the current year, provided it achieves the expected production boost from Karora and its Great Fingall project while keeping costs in check.
Westgold stated that 2024–25 will likely be the peak investment year (around $240–$250 million) as Southern Goldfields' assets are integrated and optimised, the Murchison operating assets are expanded, and Great Fingall commences production.
The company expects to double its exploration spend to $50 million, with 60% allocated to resource definition at the Fletcher Zone at Beta Hunt, the Bluebird-South Junction mine at Meekatharra, and the Starlight mine at Fortnum. Additionally, funds will be allocated for greenfields exploration across Southern Goldfields and Murchison targets.
"Production for the financial year will be back-ended, as it is anticipated that in H2 FY25, the South Junction, Big Bell Deeps, and Great Fingall projects will commence production ramp-up, and Beta Hunt is expected to reach a 2Mtpa run rate,” Westgold said on Monday.
CEO Wayne Bramwell stated in Monday’s announcement that Westgold is building a long-term, sustainable Australian gold company with an enviable pipeline of internal growth opportunities, and FY25 will be pivotal in establishing its future.
"Integrating and optimising the Southern Goldfields assets will be the focus in H1 FY25, with Beta Hunt beginning to deliver increased output in H2.
"Murchison production will lift in H2 as Bluebird-South Junction's run rate hits 1.2Mtpa, and our Great Fingall mine comes online in Q3/Q4.
"Growth capital invested into our largest and highest-grade mines will establish a business capable of delivering significantly higher outputs in FY26. Exploration investment in FY25 will extend the lives of these mines,” Bramwell said.
