Westgold Resources Limited ($WGX)

Good morning, everybody, and welcome to Westgold's Q3 FY '26 Quarterly Webinar. Your first speaker for today's call is Wayne Bramwell, CEO and Managing Director. Over to you, Wayne.

Thank you, and hello, everyone. Welcome to Westgold's March 2026 Quarterly Results Call. Joining me today is Aaron Rankine, our Chief Operating Officer; and Tommy Heng, our Chief Financial Officer. I'll begin with a high-level overview of the quarter and the broader business context before handing to Aaron and Tommy to cover operations and financials in more detail. Then we'll open up the line for Q&A. Let's start with the highlights. Slides 4 and 5 represent the Q3 numbers. Q3 delivered continued cash generation, solid production delivery and further balance sheet strength. Westgold produced 93,145 ounces of gold during the quarter at an all-in sustaining cost of $2,931 per ounce, excluding the ore purchase agreement. With the ore purchase agreement, all-in sustaining costs rose to $3,338 per ounce. Importantly, the business delivered an underlying cash build of $285 million before growth capital, exploration spend and one-off items. This translated to a $202 million increase in treasury, closing the quarter with $856 million in cash, bullion and liquid investments. These outcomes reflect the business that is now starting to operate with scale, resilience and growing financial flexibility and importantly, do so while remaining unhedged and fully exposed to the gold price. Now let's turn to what's driving that momentum, Slide #6, the waterfall. This slide highlights the momentum that has been building steadily across Westgold's business. Year-to-date in FY '26, we've generated $492 million in treasury growth, reflecting consistent operating performance, strong margins and disciplined capital allocation. What's important here is that this momentum isn't just gold price driven. It's underpinned by deliberate operational improvements, portfolio simplification and a disciplined approach to investment, all of which are strengthening margins and balance sheet capacity. This financial strength gives us flexibility, flexibility to fund organic growth, absorb volatility and continue returning capital to shareholders. Slide #7, guidance. Turning to guidance. We remain on track to deliver FY '26 production of 345,000 to 385,000 ounces with costs expected to finish towards the top end of cost guidance, reflecting both broader inflationary pressures and deliberate operational decisions taken to maximize free cash flow. With 289,000 ounces produced at the end of Q3 and key constraints now largely addressed at our major underground operations, we are well positioned heading into Q4. Slide 8, our 3-year outlook. Our 3-year outlook continues to provide a clear and executable pathway, growing production to 470,000 ounces by FY '28, while structurally reducing our cost base. It is essentially a mine mill optimization strategy that will see us invest sensibly in our mines and mills to allow us to maximize and better match our milling capacity with higher-grade ore sources, replacing lower-grade sources to produce more gold at a higher margin. This remains a conservative baseline, is fully funded and is based on our existing assets. It excludes material upside opportunities that we are actively progressing across both regions, such as the Murchison open pit program that we started ahead of schedule this quarter. With that context, I'll now hand over to Aaron to take you through the operational performance in more detail.

Thanks, Wayne, and hello to everyone on the call. Slide 10. As we guided the market, Q3 was a softer quarter following a particularly strong Q2 performance. Grades normalized this quarter, reflecting mining sequence at Starlight, which materially outperformed in Q2. As expected, we processed lower tonnes and grades from the NMG OPA, which contributed to the lower production. At Beta Hunt, ventilation constraints emerged during the quarter. However, this did not have a material impact on Q3 production outcomes due to the availability of stockpiled ore. Regarding costs, the AISC, excluding the OPA, was consistent quarter-on-quarter. Our cost discipline is increasingly evident against the backdrop of increasing inflationary pressures. From Q3, the OPA is based on the full margin to the gold price. This performance has allowed us to take advantage of the higher gold price environment, which has driven an uplift in realized prices and a corresponding expansion in AISC margins. Slide 11. Turning to mining and processing performance in Q3. I'll step through the key drivers behind tonnes, grade and throughput. As previously mentioned, at Beta Hunt, ventilation constraints emerged during the quarter following a bearing and drive shaft failure in both primary ventilation fans post commissioning. This created a temporary ventilation restriction, which required mining to be focused in lower grade upper areas of the mine. As a result, both mine tonnes and grades at Beta Hunt were impacted during Q3. Pleasingly, development rates continued to improve quarter-on-quarter at Beta Hunt despite the ventilation impacts. Importantly, the ventilation constraints did not materially affect gold production as stockpiles across the Higginsville hub were utilized to maintain mill feed. Since quarter end, the fans have been repaired and ramped up to a level where ventilation is no longer a constraint. Further engineering work is underway to address what has been identified as an underlying design fault. Total mine tonnes were lower in Q3, reflecting the Beta Hunt constraints and the absence of Lake Cowan open pits, which concluded in Q2 and contributed strongly to mine tonnes in that quarter. This was more than offset by continued strong performance across the Murchison operations, where all mines delivered solid quarter-on-quarter tonnes growth. In particular, Bluebird South Junction continued to ramp up during the quarter, achieving an annualized mining rate of close to 800,000 tonnes per annum in Q3 and remains on track to reach the targeted 1 million to 1.2 million tonnes per annum run rate by the end of Q4. Grades were also lower quarter-on-quarter, driven by the normalization of Starlight grades following its outperformance in Q2, lower grades mined at Beta Hunt during the ventilation restriction and softer grades from Two Boys. Ore processed was lower primarily due to planned maintenance downtime across all mills during the quarter. This was partially offset by increased processing of soft oxide material at Meekatharra. Finally, mill grades were impacted by the combination of lower mine grades and reduced OPA tonnes and grade during the quarter. Slide 12 shows gold production by hub with movements broadly reflecting the grade and mining drivers discussed on the prior slide. At Fortnum, the quarter-on-quarter decline primarily reflects the normalization of Starlight grades following strong outperformance in Q2. The Meekatharra Hub saw lower grade and production, driven mainly by reduced OPA tonnes and grade, partially offset by improved underground performance at Bluebird South Junction. Production at the Cue Hub was broadly consistent quarter-on-quarter. We expect a stronger performance in Q4 following the completion of ventilation upgrades at Big Bell, which address event restrictions that constrained output in Q2 and Q3. Finally, the Higginsville Hub delivered slightly lower grades with Beta Hunt mined ore supplemented by stockpile consumption, which helped support overall production levels during the quarter. With that, I'll hand over to Tommy.

Thanks, Aaron, and hello to everyone on the call today. Slide 14. Highlights the strength of cash generation from operations during the quarter, the key to a successful and sustainable business. Gold sales were lower in Q3, driven primarily by sales timing. We had 33,000 kilo ounces in inventories at the end of the quarter, valued at $225 million. We since lowered this balance in Q4. Importantly, realized gold prices remained strong, reflecting our unhedged position and full exposure to the rising gold price environment. On the cost side, performance remained largely consistent quarter-on-quarter, underscoring continued cost discipline across the business. Looking forward, we have a clear pathway to structurally lower costs over the 3-year outlook. This is underpinned by higher milled grades, reduced long-distance haulage of lower-grade material and sensible upgrades to milling infrastructure to improve efficiency. Strong margins have translated into meaningful uplift in net mine cash flow over the past 2 quarters, supporting a growing treasury balance. During the quarter, we have upsized our revolving credit facility to $600 million. This was executed from a position of strength, allowing us to secure attractive terms, including the debt being unsecured with no requirements to hedge and available for general corporate purposes. As a result, when combined with our closing treasury position of $856 million, our total available liquidity now stands at $1.45 billion, providing significant balance sheet capacity and strategic flexibility. I'll speak to our cash flow on the following slide. Slide 15. During Q3, we delivered a treasury balance of $202 million, closing the period with cash, bullion and listed investments of $856 million. This outcome reflects strong underlying operational cash flows, supported by higher margins and ongoing cost discipline. Underlying cash build was $285 million before $3 million in capital returns through share buybacks, $94 million growth and exploration spend and $14 million in one-off cash inflows from the sale of Mt Henry-Selene. We have built franking credits this quarter with $34 million in cash tax payments comprising a true-up of FY '25 tax and installments for FY '26. During the quarter, we also had growth in our listed investments balance with both our holdings in Kali Metals and Black Cat Syndicate coming out of escrow. All up, we finished the quarter in a strong position. Our balance sheet is exceptionally healthy, ensuring we are well funded to execute our growth strategy. Slide 16. Before I hand back to Wayne to wrap up, I'd like to touch briefly on shareholder returns. Westgold continues to deliver on its commitment to returning capital to shareholders. We declared a $0.03 per share final dividend for FY '25 and upgraded our dividend policy for FY '26 to reflect our growing confidence in the business and its cash-generating capacity. In addition, we launched an on-market share buyback program, a clear signal of our belief in the underlying value of the company and our disciplined approach to capital management. Since inception, we have progressively acquired $4.3 million of shares on market outside blackout periods. These initiatives are underpinned by strong cash generation with a continued growth in treasury and liquidity, resulting in building a robust balance sheet. As mentioned in the prior slide, during the quarter, we paid $34 million in tax, further strengthening our franking credit position for future fully franked dividends to shareholders. Together, this balance sheet strength and capital discipline positions us well to continue rewarding shareholders while maintaining flexibility to invest in growth and optimization across the portfolio. With that, I'll hand back to Wayne.

Impressive balance sheet, Tommy, many thanks. Slide 18, 23 drill rigs. I'd like to touch briefly on exploration. Our exploration guidance for FY '26 is $50 million, and I'm pleased to see we are on track to deliver this, supported by 23 drill rigs operating across our 2 regions. At Beta Hunt in the Southern Goldfields, we have 8 rigs currently drilling with the majority of this work focused on reserve and resource upgrades that will coincide with our group resources and reserves update, which we typically release in September. At Bluebird South Junction, drilling continues to focus on extensions and definition across South Junction and Polar Star, supporting our confidence in the longevity and quality of this core mine, which continues to grow. We are also running a surface drill program at Cuddingwarra near Cue to define extensions to the Murchison open pit program. This program commenced around 3 months earlier than planned, which is a credit to the tireless efforts of our team and our open pit contractor, [ Big Yellow ]. While the open pits will not contribute substantial ounces in this financial year, they are strategically important. They secure approximate higher-grade ore supply for both the Meekatharra and Cue hubs, improving optionality, flexibility and feed quality across the merchant over the next 3 years from FY '27. Slide 19, organic growth. During Q3, the Board approved the final investment decision for the Higginsville expansion, confirming the technical and financial robustness of the project. The expansion will lift Higginsville mill capacity from 1.6 million tonnes to a nominal 2.6 million tonnes per annum and materially improve margins through lowering our unit processing costs. In addition, the expansion has been designed to be easily expandable to 4 million tonnes per annum with an oversized crushing and grinding circuit. Following Board approval, we moved quickly in early Q4, investing $16 million to secure long lead items critical to the project. This includes the SAG mill, primary crusher, pebble crusher, classification screens, apron feeders and the tailings thickener. In parallel, we have commenced the EPC tender process, which is expected to run for around 10 weeks with contract award anticipated shortly after. Slide 20, simplifying the portfolio. Slide 20 highlights the continued execution of our Portfolio Simplification Strategy during the quarter. During Q3, Westgold completed the divestment of the Mt Henry-Selene Gold Project to Alicanto Minerals and executed the spinout of the Reedy and Comet assets into the newly ASX-listed Valiant Gold. Collectively, these transactions delivered approximately $140 million of immediate value to our shareholders with up to a further $30 million in deferred value. These outcomes are consistent with our deliberate strategy to focus capital and management attention on our core high-margin operating assets while unlocking value from noncore holdings that sit outside our long-term plans. Importantly, we have retained exposure to future upside through strategic equity positions, participating alongside Alicanto at Mt Henry-Selene and through our cornerstone shareholding in Valiant. We continue to progress divestment processes for Peak Hill and Chalice, both of which remain noncore to Westgold's operating strategy and can unlock further value for our shareholders. Slide 21, our value proposition. To close, Westgold is executing clearly against its strategy. Operational performance remains disciplined with short-term variability managed through balance sheet strength and cost control. At the same time, we are investing through the cycle, simplifying the portfolio, advancing growth projects and expanding our processing capacity to support higher margins and stronger cash generation. We are on track for guidance and expecting a solid Q4 with our key growth assets, Bluebird South Junction and Beta Hunt remaining on track to deliver their targeted run rates by the end of this financial year. We are a large unhedged gold producer across 2 regions of WA. We have long-life assets and continue to extend mine lives by drilling. Importantly, we are funded to deliver our 3-year outlook. Our balance sheet continues to strengthen with cash flow generation growing. Lastly, we are increasing shareholder returns with the dividend and buyback program in place. In closing, Q3 was steady as you go. No fanfare, just cash build. I will now open the call up to questions. Thank you.

Thanks, Wayne. We've got a number of questions through already. So we'll hop on to those. But if you would like to ask a question as well, please enter your question into the chat in the meantime. I'll start here with a question from Al Harvey. Thanks, Al, for your questions. And Al asks, if not already covered, which we can talk about it some more. The -- he's inquiring about the increase in bullion in the quarter. Was there an operational reason for this? Or is this an active management decision? Why was that not converted to cash? I'll let Wayne respond to that one.

Thanks for the question, Al. To answer your question, it was an active management decision. I mean we hold bullion when the gold price is dropping and we sell into the gold price as it goes up. The balance sheet is so strong now. We have the optionality to do this, and that's an active management decision.

Thanks Wayne. And another question from Al. Any additional info on remaining divestments, Peak Hill and Chalice lease time frames, anything else in our nonoperating resources that we think could be viewed as noncore. Wayne?

Two questions. So Peak Hill and Chalice, very close on both and hoping to be able to announce that during Q4. In terms of other noncore assets, well, we still have one underground mine on care and maintenance, which is Paddy Flat. That one is now being reworked as a potential large open pit with open pit drilling starting at Paddy's in a week or so ago. So in the short term, that's after concluding Peak Hill and Chalice, that will be it for now.

Thanks, Wayne. And a question here from Paul Kaner. Paul, he's asking at Bluebird South Junction, how have the ground conditions been holding up since the change in mining method, and I'll let Aaron answer that question for you.

Thank you, Paul. Yes, look, the ground conditions at Bluebird are very much under control with our new support and design regimes. To the point, our best-performing jumbos in the business now reside at Bluebird. We're outperforming our own internal development targets quite significantly. It's going really well.

Thanks for that, Aaron. And while we've got Paul's questions up, Paul is asking, given our cash liquidity position, why was the buyback not used more? Wayne, would you like to respond to that one?

Sure. Thanks again, Paul. We've got 2 mechanisms to return capital to shareholders. One is buyback, one is dividends. We're doing both. During the quarter, the focus was very much on the operational issues. And again, for a lot of the quarter, we were in a blackout period for lots of different reasons. And the blackout period is not well understood. We can't buy stock within a month where we issued the quarterly. So that locks out a lot of time, and that precluded the amount of days we could buy. Long story short, we're going to do both. We're funded to do both, and we'll continue to do both over the next quarter with the key objective of being a very large fully franked dividend at the end of the full year.

Thanks for that, Wayne. Ganesh is asking if addressing the ventilation design concerns, if the fixes involved will incur any production interruptions? I'll let Aaron respond to that one.

Thank you, Ganesh. The ventilation as of today is not a constraint on our mining operations and the repairs, we don't expect to have any material impact going forward. They can be done.

All right. Thank you for that. We're just triaging some more questions coming through. In the Higginsville expansion plan, we've allowed for an oversized crushing circa up to 4 million tonnes per annum. We've got a question here from Al Harvey asking what projects or targets in the Southern Goldfields would be logical feed sources to justify further upsizing the mill? And do we think that Beta Hunt with Fletcher and Mason could be mined at that rate? Or is there a requirement to get ore from other targets such as Two Boys? I think, Aaron, would you like to respond to that one?

Thank you Al. As we covered in the presentation, we've got 8 drills on Fletcher at the moment. We don't know how big this thing is. We haven't done the study work yet, but largely, we would expect that it comes from the Beta Hunt tenements.

Thanks very much, Aaron. And we've got a question here from Hayden. Hayden is asking, Wayne, should shareholders expect a dividend in addition to the buyback? Wayne, what do you say to that?

The easiest question today. The answer? Yes.

There you go, Hayden. Another question here. When do we get the exploration update? Any chance that some results will be released earlier. This question from Ganesh, and I will hand that one to Wayne.

Thank you, Ganesh. Every chance, but the real focus is working towards the resource and reserve update in September.

Thank you for that. And another question here from Ganesh. Ganesh is saying, nickel is making some noise. Any government support and revisiting the same in Beta Hunt. Wayne?

I can take that one. The West Australian government has recently set up a $15 million fund to assist nickel juniors to get back into the market. We won't need that money, and we are actually actively doing work on nickel as a part of our ongoing strategy. We're sitting on a lot of nickel units in Beta Hunt. And even though we don't speak about it, we are very conscious of the value in ground.

All right. Question here from next -- let's just see, sorry, I'm just squaring through those if you'd like to give me a moment. One moment, please. Well, we've just work through these and see which ones we've already answered. I think there's a lot of duplication here. So just bear with us for one moment. Just having -- had a look through all of the questions that come through the -- I think the rest are duplicates of the questions that have already been answered. So I think we might have answered them all actually. If you'd like just any final questions, please enter them now. I'll hand over to Wayne then just to wrap it up. But thanks, everyone, for joining us, and thank you for your questions. I'll hand over to Wayne to make some closing remarks. Wayne?

Thank you, Annette, and thanks for everyone who patched in today. As I said and to recap, it was steady as you goes in Q3. We're hitting Q4 in good shape. And once removing some of these niggling infrastructure issues, it's full steam ahead. It's all about cash build in this financial year and setting up to -- for a large dividend and continuation of the share buyback. We're funded to do both.

Thanks all. Thank you for joining us.