Westgold Resources - Reinvigorated Australian Gold Producer

Westgold Resources has undergone a significant transformation over the past year, emerging as a simplified, productive and profitable Australian gold producer. With a strengthened balance sheet, investments in its people and operations, and exposure to rising gold prices, Westgold offers investors an attractive opportunity.

Safety and Productivity Gains Drive Turnaround

In FY2023, Westgold Resources delivered a major operational turnaround, achieving 257,000 ounces of gold production at an all-in sustaining cost (AISC) under A$2,000 per ounce. This production was achieved safely and profitably, representing a major change in the company's performance. A key driver was Westgold's focus on safety and investing in its people. The company's safety statistics have improved markedly, reflecting an important cultural shift. With over 1,400 employees and contractors, Westgold's workforce is its greatest asset. The simplified operating model also boosted productivity and lowered costs. Whereas previously the business was complex and unwieldy, today just four key underground mines feed three mills with a total capacity of 4 million tonnes per annum.

Stronger Balance Sheet Provides Stability

Westgold Resources has systematically strengthened its balance sheet over the past year. The company ended FY2023 debt-free, with A$192 million in cash and liquid assets. Two consecutive quarters of free cash flow generation have further boosted the balance sheet. This provides a stable platform for continued investments in the company's growth. With gold currently trading around A$3,000 per ounce, Westgold is poised to benefit from its unhedged position. The company has eliminated its hedge book, giving it full exposure to rising Australian dollar gold prices.

Investing in Innovation and Technology

Westgold Resources has quietly established itself as an innovator in the Australian gold sector. The company has constructed four hybrid power stations at its operations, combining gas, solar and battery technology. This will reduce fuel costs and carbon emissions. The company also operates a state-of-the-art underground training simulator at its Canning Vale facility. This provides employees with realistic underground experience without needing to enter the mines. In terms of equipment, Westgold was the first Australian miner to purchase a CAT R2900 XE hybrid loader. With three more now on order, the company is at the forefront of utilizing new technologies to drive productivity and efficiency gains.

Organic Growth Through Mine Life Extensions

Rather than risky acquisitions, Westgold Resources is focused on extending the lives of its existing operations. Up to 11 drill rigs have been deployed over the past year, completing over 100,000 metres of drilling. This has successfully added mineral resources and reserves, extending the lifespans of its mines. It has also supported the development of new projects. Most notably, Westgold has commenced the development of the Great Fingall project, which hosts over 1 million ounces of gold resources. First production from Great Fingall is expected in 2024, providing a further boost to the company's production profile. Additional growth projects in the pipeline include Golden Crown, which also hosts a 1 million ounce resource.

Westgold Resources could be a good investment opportunity

Westgold Resources offers a compelling investment case, having transitioned to a productive, low-cost gold producer with significant growth potential.

With its strengthened balance sheet, the company has the financial capacity to fund organic growth initiatives. The management team has demonstrated its ability to successfully transform operations and improve productivity. Further upside exists through rising gold prices, given Westgold's unhedged position, and continued exploration success. Geographic diversification across multiple projects in Western Australia also reduces risk. For investors seeking leveraged exposure to the Australian gold price, with stability and growth potential, Westgold Resources presents an attractive opportunity. The company's reinvigorated production profile, lower costs and strengthened finances provide a platform for strong returns over the long term.

Strong Production Growth Potential

• Westgold has transformed into a lean and profitable gold producer, achieving 257,000oz in FY2023. With the development of Great Fingall and other growth projects, production is poised to increase substantially in the coming years.
• The company is actively extending mine lives through extensive drilling, adding mineral resources and reserves to support further growth.

Significant Cost Reductions

• Simplified operating model and investments in innovation/technology have driven down costs. AISC was reduced to under A$2,000/oz in FY2023.
• New hybrid power stations and equipment will continue to reduce fuel and energy expenses. Further cost optimization is expected.

Strong Financial Position

• Westgold has an excellent balance sheet with A$192m in cash and liquids, no debt, and growing free cash flow. This provides funding capacity for growth.
• Fully unhedged position gives full leverage to the rising Australian dollar gold price.

Proven Management Team

• Current management has demonstrated ability to transform company by driving safety, productivity and cost improvements. Experience gives confidence in continuing execution.
• Insider ownership helps align management incentives with shareholders.
• Diversified portfolio reduces risk and has significant exploration potential to add resources.

In summary, Westgold Resources offers investors production growth, lower costs, financial strength, upside to gold prices, and exploration potential. For these reasons, it represents an attractive gold investment opportunity.