Westgold Resources Limited (WGX) Earnings Call Transcript & Summary

Good morning, everybody and welcome to the Westgold Resources Limited June Quarterly Conference Call. Your first speaker today is Wayne Bramwell. Please go ahead, Wayne.

Thank you, Shane. Welcome everyone to today's webinar. We'll go straight to Slide 5, Q4 FY '24 overview. We continue to build cash. We had a solid final quarter in Q4 FY '24, building $21 million in cash, bullion and liquids before we paid a $4.7 million cash dividend. This resulted in a $16 million net cash, bullion and liquid build for the quarter. We've now delivered 6 straight quarters of cash build, over $71 million for the full FY '24. Key to this delivery has been our strategy to focus on safe and profitable ounces. Safety is paramount in this business, and it's our view that you can't build a sustainably profitable business if you do things unsafely. Drilling has been key to our business turnaround, and our activity is already starting to add mine life to our key assets. We are an owner miner who drills, with drilling success culminating this quarter in a 41% growth in Starlight's mineral resource. With our new debt facility remaining undrawn, we remain debt free with our last zero cost collar being delivered during the quarter. Very pleasingly, the Board of Westgold declared a $0.0125 per share fully [ franked ] final dividend for FY '24. This was on top on an interim dividend paid earlier in the year. Of course, we are most excited about the impending completion of our merger with Karora, which is expected to complete tomorrow. This is a fantastic combination of 2 cashflow generating businesses into a larger, bigger, and better funded company that can stand shoulder to shoulder with the best gold miners on the ASX and the TSX. I'll talk more about this at the end of the call. Slide 6, Q4 FY '24 group production and cost. We produced almost 53,000 ounces of gold at an all-in sustaining cost of $2,041 an ounce this quarter. Production was marginally higher than the previous quarter and saw the performance of Starlight continue to improve and Fender finally achieve commercial production after a slow start. Phil will go through this in more detail. Our all-in sustaining cost fell 17% in the fourth quarter. With no fixed forward hedge book, we continue to be fully leveraged to the increase in gold price. Combining this with our lower quarter-on-quarter all-in sustaining cost allowed us to continue to deliver healthy margin improvement as the graph depicts. Slide 7. This is our scorecard for FY '24. In FY '24, we produced 227,000 ounces of gold at an all-in sustaining cost of $2,164 an ounce, allowing us to achieve the top end of our adjusted production guidance of 220,000 to 230,000 ounces and deliver the lower end of our cost guidance of AUD 2,100 to AUD 2,300 per ounce. The prudent decision to pause the underperforming Paddy's Flat inevitably put some pressure on our original guidance set in August, 2023. That said, it was the right business decision and closing Paddy's Flat demonstrates our resolve to priorities cashflow and profitability over production. We have exceeded our growth capital guidance of $130 million this year, having invested $157 million over the full financial year. The spend increase has been driven by the acceleration of the Great Fingall development and the Big Bell expansion and impacted by the delayed commercial production of Fender. Tommy will break this down further by discussing the quarter-on-quarter movement. Finally, and importantly, we hit our expiration expenditure expectations of $25 million. We don't see exploration as a cost. It's an investment in our future as it extends our mine lives. With that, I'll hand over to Matt Pilbeam, who will take you through our safety and social performance.

Thank you, Wayne, and a very good morning to everyone on today's conference call. This morning, I'll take you through a brief overview of our quarterly performance and some key metrics for Q4 as we round out the end of FY '24. Overall, I'm pleased to advise that Westgold has continued to improve across the spectrum of our key safety metrics this quarter against the last. Total recordable and lost time injury frequency rates improved, with TRIFR reducing to 6.85 and lost time injury frequency dropping to 0.62, while our high potential event frequency marginally increased for the quarter. Also, over FY '24, we delivered substantial improvements among our safety metrics, including an overall improvement of 18% for our total recordable injury rates. In addition to this, our overall turnover continues to improve month-on-month. Female and indigenous employment increased and our significant psychosocial harm and environmental events remained at 0. It's a very busy time for us at Westgold with many moving parts and lots to be excited about. I'm keen to outline briefly some significant steps taken by Westgold during the quarter towards building on our existing community relationships through the coordination of community engagement sessions at both Meekatharra and Cue town sites. Wayne Bramwell facilitated a broad, open and respectful discussion with our traditional owner groups, shire leaders and community members, all with a clear focus of improving our relationships in our regional areas. We are looking forward to continuing a more regular engagement piece with our key stakeholders into the future. With that in mind, I will now hand over to our Chief Operating Officer, Phil Wilding, who will provide his operational update. Thank you.

Thanks, Matt, and on to Slide 11. This quarter-on-quarter movement in production by ore source summarizes the key points we made in production space. We produced 52,795 ounces of gold in quarter, marginally higher than that in Q3. Paddy's Flat was paused last quarter, not entering the feed blend this period. The real star for us being Starlight, which opened up a large high-grade Nightfall lode. Big Bell also performed well, delivering record tonnes, albeit slightly lower grade. Fender stepped up outputs, delivering a large contribution to the quarter-on-quarter production. The full benefit of the comparatively strong quarter-on-quarter mining performance of Fender and Big Bell will have delayed until Q1 FY '25 as persistent rains affected haulage to processing plants, resulting in significant stockpile build at the Big Bell run. At Bluebird we had lower production as a result of implementing dilution controls, meaning slower mining rates. Slide 12, Bryah Operations. The Bryah region has performed exceptionally well this quarter as a result of mining a large Nightfall lode flagged in the prior quarter. The Starlight mine produced 149,000 tonnes of ore at 3.9 grams per tonne, 19,000 ounces mined. In comparison, last quarter our grade was 2.6 grams a tonne. What's encouraging is that this system continues on the current level of the mine and has been exposed on levels further down. The mill processed 190,699 tonnes of ore in the quarter at a grade of 3.2 grams a tonne with 96% recovery, resulting in 18,902 ounces of gold being produced. Due to substantial grade of the mined ore, we blended this all with lower grade stockpiles to ensure an optimal recovery. This led to a high-grade stockpile of 19,000 tonnes being built up in Fortnum. The pebble crusher change-out is happening early in Q1 at the Fortnum processing plant, commissioning in early August. This is expected to increase processing rates at the plant. Costs of Bryah came down with the increased production, and we've accelerated developments at the Nightfall lode in bottom-up and top-down access drives. The future voting well for this one and the platform is set for sustained elevated production in the FY '25. Slide 13, Starlight Resource Estimate. The major factor that has unlocked the true potential of Starlight has been drilling. Over the last 18 months we've invested substantial effort into drilling this ore body, the payoff now starting to come into fruition with Nightfall. We've had multiple underground diamond rigs spinning in the mine which culminated 41% resource upgrade announced in June this year. Encouragingly, we've converted a substantial amount of inferred resource into measured and indicated resources that are now available for reserve studies. We continue to invest in this drilling with 3 underground drills operating as we speak. You can see the strong intersections that have been hitting on the screen. The bottom line, Starlight Mine is getting bigger, the more drilling we do. It's already had 800,000 ounces mined since its inception and does not appear to be slowing. Slide 14, Murchison Operations. Production in our Murchison Operations dropped quarter-on-quarter due to cessation of production of Paddy's, persistent rain events impacting haulage, and lower production of Bluebird. Minning stopped at Paddy's Flat last quarter and there was no feed from Paddy's into the mill blend this quarter. Bluebird produced 95,000 tonnes, 3.55 grams a tonne this quarter, representing a slight decrease quarter-on-quarter in physicals. Lower grades driven by stock dilution in Q2 have been addressed through an updated more robust mine plan which over time will see dilution reduce and grade increase. This has come at the expense of mining rates in the short-term. The Big Bell Mine in Cue performed very well, delivering mine production record of 319,000 tonnes of ore at a grade of 1.9 grams. The south side cave continues to be the primary feed source. We did open up the north side of the cave during the quarter. However, this is only a small portion of the overall tonnage. Big Bell Deeps continues to progress with the first stoping level underway and paste infrastructure works well advanced. The Fender underground ramped up towards commercial production this quarter, projects 74,000 tonnes of ore at 2.3 grams a tonne. Despite the strong performance of Big Bell and Fender, rain interruptions constrained haulage from these 2 mines to both Tuckabianna and Bluebird Mills resulting in 64,000 tonne stockpile build-up at Big Bell for later haulage to the mills. Secondly, a lack of ore in all the trim Cue resulted in increased processing of lower grade stockpiles and slightly lower production. Slide 15, mine planning for the first junction stopes. Turning once again to Bluebird, which is an evolving ore system, you will see mining rates at Bluebird increase as we open up new mining fronts. We are accelerating access into South Junction for existing Bluebird levels and infrastructure as we're encouraged by results and substantial drilling we've been conducting over the last 6 months with multiple surface and underground rigs. And we're continuing to drill at Bluebird with 5 rigs spinning as we speak. The focus is shifting to infill drilling so that a statement of updated ore reserve can be delivered. South Junction will start production in the very near future. We're also continuing backfill studies, which will enable us to ensure optimum value extraction from Bluebird, which is fast becoming a long-life mine. In the grand scheme of things, what this means for milling at the Bluebird Hub is profound. The South Junction area of the mine will be large bulk tonnage, and the grade will substantially increase mine production. We have a target for this mine to grow production to a scale that eliminates the need to process hauled ore from Cue, eliminating haulage costs and displacing low-grade ore, magnifying cash flow generation as a result. Slide 16, Great Fingall. We've now completed the initial resource definition drilling campaign for the upper section of Great Fingall in around the open pit. The drill results are giving us increased confidence that early profitable production will be possible out of this system. The Fingall Flats are sovereign and the remnants of the Upper Great Fingall Reef are all undergoing mine planning assessments as we speak. It's important to note that these areas have substantial capital development in place with a deep line and other infrastructure in close proximity. The main game, of course, owes Great Fingall and Golden Crown itself. I'm pleased to report that Phase 1 of the primary vent system is now complete with initial fans installed and the first large diameter vent raise. The Great Fingall study, as a reminder, assumed a steady state production of 45,000 ounces per annum and only costed $1,801 an ounce. The first are an FY '25 coming from the virgin regions below the Great Fingall old workings. On to Slide 17, where I'll hand over to Simon Rigby to take you through exploration.

Thank you, Phil. Now turning to Page 18. The exploration team has had another very busy quarter with extensional and greenfields exploration programs conducted within Westgold's large tenement portfolio within the Murchison region. At South Junction, within the Bluebird operations at Meekatharra, the team has continued to progress the exciting resource definition drilling program beneath the open pits, which historically produced over 1 million ounces of gold. During the quarter, we completed a further 22 diamond core holes for nearly 12,000 meters, primarily targeting the Polar Star and South Junction lodes. Outstanding assay results have been returned from many holes, with a selection shown on the cross section on this page, with the most impressive being 20.9 meters at 6.7 grams in hole 21, wedge 2. More details on the results to date can be found both in the quarterly, but also in the 2 specific South Junction ASX releases made during the period. The South Junction drill program is ongoing with 3 rigs currently in operation and with approximately 6,000 meters remaining to be completed within the approved program. Turning to Page 19. In addition to the South Junction program, the team has been busy testing a further 10 early stage greenfields targets during the quarter. At Day Dawn near Cue, we completed a first pass reverse circulation drilling program over a series of Great Fingall analogous targets interpreted from high resolution gravity geophysical data that was collected earlier this year. Excitingly, some encouraging gold results were returned from a couple of these targets with the best result coming from the South Trenton prospect with hole 16 intersecting 11 meters of 2.76. The image on the right shows the RC chip trays for this drill hole and meter by meter assay results. This mineralization is hosted in the favorable Unit 3 of the Great Fingall Dolerite and is the same style as that at Great Fingall and Golden Crown. Follow-up programs are currently being designed. Elsewhere, the exploration team conducted early-stage air core geochemical drilling, testing a series of lithostructural targets in the Cuddy, Ora, Reedy and Labouchere areas. Considering the nature of these types of drill programs, we have been encouraged by the results from Reedy West's target, where numerous drill holes have returned anomalous gold results, warranting further investigation. Going into the September quarter, the exploration team will remain very busy with the ongoing South Junction program, as well as following up the good results from Day Dawn and Reedy West. In addition, we will execute drill programs in the Peak Hill and Nannine regions, and of course, start to work with our new teammates from Karora to investigate the priority targets within their large tenement portfolio in the Kambalda and Higginsville regions. With that, I'll hand over to Tommy to talk about our financials.