Westgold Resources (ASX:WGX) has established a new $100 million Revolving Corporate Facility (RCF) under a secured syndicated facility agreement (SFA) executed with ING Bank (Australia) and Société Générale.
The $990 million market capitalisation company says the RCF may be utilised for general corporate purposes and has a 3-year term.
Argonaut PCF acted as financial advisor to Westgold.
Importantly, Westgold notes that it is not required to enter into mandatory gold hedging as part of the facility conditions. This allows the company to retain full discretion over hedging decisions.
Westgold remains free of fixed forward hedges facilitating the opportunity to take advantage of gold sales fully leveraged to the spot price.
Commenting on the RCF, Managing Director Wayne Bramwell says Westgold is confident in the trajectory of its business and sees the support of the two tier-one international financiers as strong validation of the company’s growth plans.
“With $217 million of cash and bullion at the end of Q1, FY24 Westgold is fully funded to develop organic growth assets such as the Great Fingall mine at Cue. With a strong balance sheet and growing cash flows from our operations this new corporate facility provides an additional $100 million in additional firepower to move quickly on opportunities we see emerging.
Westgold has demonstrated both intent and discipline regarding growth and will maintain that discipline. Critically the company remains debt free with the corporate facility fully available and currently undrawn.”
Westgold produced 63,104oz at an all-In sustaining cost (AISC) of $1,935/oz in Q1 FY24. Lower mined grade at Big Bell and lower mined tonnes at Starlight contributed to an 8% decrease in gold production and a 9% increase in ASIC/oz compared to Q4 FY23.
As flagged in the prior quarter, Big Bell grade was expected to drop from Q4 FY23 as a result of increased mining in the lower grade southern side of the cave. Starlight’s return to profitability continues as this mine is transitioning through challenging legacy workings which previously impacted ore production in the mine.
Westgold sold 62,120oz of gold for the past quarter at an achieved gold price of $2,888/oz, generating $179M in revenue. The completion of Westgold’s fixed forward sales contracts early in the quarter helped maintain operating margin by increasing exposure to elevated spot prices, offsetting the higher AISC/oz.
With the achieved gold price $953/oz over AISC, Westgold’s operations generated $60 million of mine operating cashflow. The company says total AISC for Q1 FY24 of $122 million was in line with the Q4 FY23 AISC of $122 million.
While the costs of mining and milling activities are comparable to the prior quarter, there are early indications of inflationary pressures on key consumables amid the ensuing developments in the Middle East together with increasing labour cost pressures driven by the continued strong performance of the WA economy.
The company says one of the key consumables experiencing inflationary and supply pressure is diesel, to which Westgold is increasingly reducing its vulnerability through the adoption of renewable energy and innovative technologies such as hybrid power stations, hybrid diesel-electric underground loaders and ventilation on demand systems.
Capital expenditure during Q1 was $23 million, which was invested in growth and development capital predominately for the expansion at Bluebird and Big Bell underground mines as well as the transition through difficult legacy workings at Starlight underground mine.
Write to Adam Orlando at Mining.com.au
Images: Westgold
