Westgold Resources (ASX:WGX) Q1 2027 Earnings Call

0:00 Thank you everyone for joining the call today. With me is Wayne Bramwell, Managing Director and CEO of Westgold Resources. Over to you Wayne.

0:11 Thank you and hello everyone. Welcome to Westgold's September 2026 quarterly results call. Joining me today are Aaron Rankine, our Chief Operating Officer, and Tommy Heng, our Chief Financial Officer. We'll walk through today's numbers before opening up the floor for questions. Slide 4. A strong start to FY27. Safe and profitable ounces is Westcold's mantra. Safety first. In Q1 we recorded no lost time injuries and our LTIFR reduced to 1.17. We also saw strong improvement across our key leading safety indicators. supported by sustained frontline engagement, critical control verification and leadership field presence, reflecting our ongoing focus on fatality prevention and critical risk management.

1:04 Now to our business performance. We've delivered a strong start to FY27, producing 98,400 ounces at an all-in sustaining cost of $2,912 per ounce, and we remain firmly on track to deliver our FY27 guidance. With Q1 under our belt, that takes us to more than 400,000 ounces produced over the last four quarters. Importantly, ore produced from our ore mines increased 7% this quarter. That lifted our ore stockpiles by 51% to 696,000 tonnes, roughly six weeks of mill feed. Those stockpiles kept our mills running through wet weather in the Murchison and provided ample ore feed when the mills emerged from their heavier maintenance schedule this quarter.

1:56 At Beta Hunt we hit a record 2 million tonne per annum annualised mining rate in September with the new interim ventilation now commissioned. Aaron will take you through this in more detail later in the presentation. Our margins remain strong. An all in sustaining cost margin of $3,117 per ounce delivered $292 million in mine operating cash flow and a $251 million underlying treasury build. We closed September with over $1 billion in cash, bullion and liquid investments, remaining debt free and fully unhedged. It was also a big quarter for our future. We grew group ore reserves by 41% to 4.1 million ounces and set out a fully funded pathway towards half a million ounces of production through our updated three-year outlook.

2:53 We continue to reward shareholders, declaring a 10 cent fully franked FY26 dividend and also buying back $22 million worth of shares in Q1 FY27. We also introduced a new shareholder capital returns policy. Our strategy is doing what it was designed to do. Stronger production, driving stronger cash generation, which funds both our growth and ongoing returns to our shareholders. Slide five. Q1 results firmly in line with guidance. Q1 has put us firmly on track for FY27. We produced 98.4 thousand ounces broadly in line with the 98.9 thousand ounces we delivered in Q4 and right on pace for our full year guidance of 385 to 425 thousand ounces.

3:47 Our all in sustaining costs of $29.12 per ounce was below our guided range of $29.80 to $33.80 per ounce. That's despite a quarter with more planned mill maintenance across all our processing hubs and higher waste stripping in our open pits. We're investing in line with plan. Non-sustaining capital was $111 million against full year guidance of $450 to $480 million going into development at Bluebird, Great Fingal and the Beta Hunt Mines and into processing, power, ventilation and camp infrastructure. Expiration was $24 million against guidance of $50 to $75 million for the full year. Spen picked up in the quarter as planned drilling programs received their approvals and access and will keep drilling.

4:37 Slide 6 Westgold 456 Fully Funded Growth In September we released our FY27 guidance and an updated 3 year plan. The simplest way to describe it is Westgold 456. What does it mean? Four. Four operating hubs across the Murchison and Southern Goldfields with 5.7 million tonnes a year of installed processing capacity. That grows to more than 7 million tonnes a year by FY29 through the Kew expansion this year and the Meeker Tharra expansion planned in FY28. 5. A fully funded pathway to around half a million ounces a year by FY29.

5:23 FY27 sees Great Fingal Reach commercial production and the Kew expansion come online. From there, production steps up to between 425 and 470,000 ounces in FY28, reaching 460 to 510,000 ounces in FY29. with our all-in sustaining costs falling at that point to between $2640 and $3000 per ounce as higher grades and throughput come through. We're funding the 456 plan from our own cash flow while continuing to return capital to shareholders in parallel. 6. Fletcher. It isn't included in the three-year outlook but with a 1.1 million ounce maiden reserve announced last year, it could add around 140,000 ounces a year on top of our production and gives us a very tangible pathway beyond 600,000 ounces a year for the group.

6:22 Our Q1 result is the first step in delivering that plan. With that, I'll hand over to Aaron to take you through our operational results.

6:30 Thank you Wayne and good morning to everyone on the call. Our operations continued to build momentum in Q1. We mined 1.42 million tonnes of ore at 2.2 grams per tonne, up 7% on Q4, which was our strongest mining quarter of last year. That increase came from Great Fingal, Starlight, our Murchison Open Pit Program and Beta Hunt, with overall mine grade lifting slightly quarter on quarter. Processing throughput was steady with mills fully utilised, processing 1.46 million tonnes of ore at 2.3 grams per tonne. Quarter on quarter upside at Lakewood was offset by usual Q1 heavy plan maintenance regimes across all of our processing hubs.

7:17 The result was 98.4 thousand ounces, in line with Q4, with production sourced from our own mines up 5%. That takes us to over 400,000 ounces over the last 12 months. The capability of this business is starting to show and there is plenty more to come. Slide 9. Our stockpiles are building by design, creating resilience in our operations and de-risking our planned incremental mill expansions that will support higher production at lower costs. Total ore stockpiles grew 51% to 696,000 tonnes, about six weeks of mill feed at our installed capacity. The build happened in both regions, the Murchison up 60% to 485,000 tonnes and the Southern Goldfields up 34% to 211,000 tonnes on the back of record mining at Beta Hunt.

8:13 The resilience this creates was on show this quarter. When wet weather closed haul roads in the Murchison over the period, our mills kept running at full speed. Slide 10. Regionally, the Murchison produced 71.9 thousand ounces, slightly below Q4. That reflects lower OPA production and increased planned maintenance at all three Murchison mills. Notably, production from our own ore sources in the Murchison was up around 4%. Across the Murchison hubs, Meekatharra delivered 35.9 thousand ounces, with a consistent feed grade of 2.5 grams per tonne. The mill ran at an annualised 1.9 million tonne run rate, still above its 1.8 million tonne annualised base capacity.

9:02 Q lifted to 19,000 ounces with grade slightly improving to 2 grams per tonne as more great fingal is introduced into the blend and Fortnum continues to deliver to plan with around 17,000 ounces. In the southern goldfields Higginsville produced 26.5 thousand ounces up on Q4 that includes the scheduled toll treatment parcel at Lakewood partly offset by the major plan shutdown at the Higginsville mill. Slide 11. At Bluebird, mining ran at an annualised 870,000 tonnes, slightly below our 1 million tonne per annum target, with the mining schedule focused on smaller, higher grade stopes, evident in the increased mine grade at 3.1 grams per tonne for the quarter.

9:52 We continue to open additional mining areas, giving us multiple mining fronts, underpinning the improved mining rates and delivery of plus 1 million tonnes for the full FY27. Bluebird is well positioned as the key feed for larger meek tharum mill that will be delivered in FY28. Slide 12. Earlier today we released an update on Beta Hunt and it's a milestone we're proud of. When we acquired Beta Hunt in August 2024 we saw a high quality ore body held back by legacy infrastructure and a lack of drilling. Under prior ownership it had not sustained mining rates above around 1.4 million tonnes per annum. Over the last two years we've invested around $33 million to remove infrastructure constraints in ventilation, dewatering, water supply and power.

10:43 We've also substantially improved mine design and significantly increased diamond drilling to bolster reserve and resource confidence. That work is paying off. In September Beta Hunt delivered a record month at an annualised circa 2 million tonnes per annum. Our interim primary vent was commissioned during the quarter ahead of the target we provided in Q4 and we are now targeting a sustained 2 million tonne a year mining rate from Q2 this year. Beta Hunt also delivered its second consecutive quarterly record, mining 423,000 tonnes in Q1. With those foundations in place, our focus shifts to optimising cost and looking forward to firm up what is possible.

11:29 Integrated Southern Goldfields expansion studies are underway and due next half, while we continue with seven drill rigs growing the ore body. With that, I'll hand over to Tommy to take you through our financial results. Thank you.

11:44 Thank you, Aaron, and good morning, everyone. Slide 14. This slide shows the strength of our cash generation while we fund our growth. We sold just under 100,000 ounces in the quarter at a realized gold price of $6,029 an ounce, generating $602 million in gold sales revenue. We remain fully unhedged. The oil and sustaining costs increased to $2,912 an ounce, reflecting higher waste movement in our open pits, planned maintenance at our mills, annual labour increases and additional toll milling at Lakewood. Even so, our all-in sustaining cost margin of $3,117 an ounce generated $292 million in mine operating cash flows and $157 million in net mine cash flows after investing $111 million in non-sustaining capital and $24 million in exploration and resource development.

12:47 We added $101 million to cash, bullion and investments during the quarter. We remain debt-free with around $1.6 billion of available liquidity, including our undrawn $600 million credit facility. Slide 15 Q1 delivered an underlying Treasury build of $251 million. before share buybacks of $20 million, growth and exploration span of $135 million and proceeds from asset sales of $5 million. That's after we invested in building our stockpiles during the quarter and after $41 million of tax instrument payments. In Q2, alongside our regular FY27 tax instruments, we'll pay the balance of our FY26 income tax of approximately $180 million, with the tax return being finalized.

13:38 Our closing treasury was $1.04 billion, up $101 million on June. This level of cash generation allows us to fund our growth internally while continuing to return capital to shareholders. Slide 16. Which brings me to the shareholder returns. In FY26, we returned $122 million to shareholders, comprising $27 million in buybacks and our $0.10 fully franked dividend, totaling $95 million. The dividend was paid out to shareholders in early October. For FY27, the board has approved a $50 million on-market buyback and we've already completed $22.3 million of this at an average of $5.46 a share.

14:27 Under our revised shareholder capital returns policy, we've committed to a minimum return of $0.03 per share each year, including a minimum $0.02 dividend. An important point for shareholders, under the policy, dividends are paid annually. The board will determine the FY27 dividend in August, after the finalisation of our FY27 financial year. So, we won't be paying an interim dividend in February 2027. I'll hand back to Wayne to cover off on exploration and our closing remarks.

15:03 Thank you Tommy. We continue to invest in the drill bit. $24 million in quarter one with 25 rigs operating at quarter end. In the Murchison, drilling at Bluebird is defining the extent of the system while Kew and Paddy's Flat are testing new open pit sources that sit outside our current three-year outlook. At Beta Hunt, seven underground rigs are supporting near-term mining and continuing to define Fletcher. Greenfields programs are also underway. Some of our lake targets at Higginsville were delayed by rain and those programs will start as soon as practical. Long story short, in FY27 we are investing between $50 and $75 million in exploration and resource definition, focusing on reserve conversion. Last year we converted reserves at $27 an ounce and we won't be slowing down.

16:01 That number speaks to the quality of the portfolio. In closing, Westgold is off to a strong start in FY27. We are building a leading Australian gold producer. We delivered 387,000 ounces in FY26 and 98.4,000 ounces this quarter, firmly on track for guidance. All of our assets are in Western Australia, a Tier 1 jurisdiction. We operate four processing hubs with capacity growing from 5.7 million tonnes per annum to more than 7 million tonnes a year by FY29. We have a clear, fully funded pathway to around half a million ounces of production by FY29, and with Fletcher, a tangible pathway beyond 600,000 ounces.

16:50 Our assets are long life, with all reserves up 41% to 4.1 million ounces. Our balance sheet is strong, with over a billion dollars in cash, bullion investments, and we remain debt free and unhedged. Most importantly, we are increasing returns to our shareholders. $122 million returned in FY26 and a minimum $0.03 per share every year under our new policy. Last year, we effectively delivered six times our minimum on the policy of that year. Slide 21. This slide compares Westgold with other ASX gold producers on a simple measure, enterprise value against consensus FY27 earnings. On that measure, we traded around 3.3 times towards the bottom of the group and at roughly half the peer median.

17:42 Historically, the market has discounted Westgold for inconsistent delivery, operational risk and a business that was still being rebuilt. Some of that was fair at the time, but that's no longer the case. We've produced 402,000 ounces over the last four consecutive quarters. We've built 696,000 tonnes of ore stockpiles, which kept our mills running through wet weather this quarter. We generated $251 million underlying treasury build. We hold a billion dollars in treasury with no debt and no hedging, and we have a fully funded brownfield expansion path towards half a million ounces of production a year, backed by our 4.1 million ounces of ore reserves. There's a lot to like within Westgold. The reasons for that discount are being removed, but our valuation hasn't caught up. That gap is the opportunity in front of investors today.

18:37 Slide 22, in closing. The time is now. FY27 is another year where Westgold focuses on delivery, operational and financial delivery. We have de-risked the delivery over several years and now have a sustainable business that can do two things. It can fund its own growth and it can consistently return capital to its shareholders. That's a powerful combination and one that is not yet fully appreciated by the market. How have we de-risked the business? We drilled. We added 1.5 million ounces before depletion to our reserve last year at $27 an ounce. We closed FY26 with 4.1 million ounces of reserve. We invested capital ahead of production in our mines.

19:23 At Great Fingal, Bluebird and Beta, mine outputs are lifting at each of these core underground operations. We are building stockpiles in front of each of our processing hubs. These buffer stocks ensure our mills can keep generating revenue even when it rains. We are focused on our largest assets now and a point not well known is Westgold has five mines that have each produced greater than one million ounces. Five one million ounce producers in one company? That's a rare combination. Anyway, I'd like to close today with thanking our team for their efforts in Q1. We are focused on delivery. And so from Westgold, I'll open the floor now to questions. Thank you for all joining us today. Wayne here.

20:14 I'll dive straight into the questions. First question from Khanpeka from Petra. Bluebird, September production improved through higher grades rather than mining volumes. What specifically needs to change to lift mining above 1 million tonne per annum in December and is the previously indicated 1.2 million tonne per annum run rate during FY27 still achievable? I'll hand that to Aaron.

20:40 Thank you Wayne and thank you Khan for the question. I'll draw your attention to slide 11 of the deck in terms of what needs to happen to get us to the 1 million tonne run rate. Essentially we're there to have been about opening up mining areas and de-constraining the pace field sequence. So we're there now and fully expect the mine to continue to lift and Deliver the 1 million tonnes for the full financial year as expected.

21:08 Thanks Aaron. Next question, again from Khan, specific to Beta Hunt. With sustained 2 million tonne per annum mining targeted from this quarter, how much can be processed through Higginsville and tolling arrangements in FY27?

21:24 Thank you again, Khan. So the existing processing capacity inclusive of our Lakewood contract is about 1.7 million tonnes for the year. So with Beta Hunt delivering and Two Boys, we expect a stockpile build of approximately 500,000 tonnes for the year. And gold production will be as expected at around the 115,000 ounces as put in our guidance.

21:48 Thanks again, Aaron. Next question from Peter Bryant. Peter asks the question, future takeover opportunities? Thanks for that, Peter. I'll take that one. We're very much focused on organic growth. I mean, takeovers, really, with growth in these businesses, you only have two options. You either buy growth or you build it. in FY27, FY28 and FY29 under the 456 strategy we're very much focused on organic growth from the things we already own. Next question from Paul Rosenko. Paul asks, what are our drill rigs up to lately? Any results coming? Are you looking for more open pits on the Higginsville property?

22:33 And he asks a question about, is diesel fuel a concern? I'll answer the question about the drill rigs. Any results coming soon? 100%. Are you looking for more open pits on the Higginsville property? The actual, we are, I mean, and again, they're Greenfield's exploration at Higginsville is really focused on open pit material. A lot of that drilling got paused during Q1 because of rain and the one rig that you see running at Higginsville at the moment is drilling underground extensions at our operating Two Boys mine. I'll hand the question over to Diesel about Diesel to Aaron.

23:10 So in short, no, we've invested in increasing storage capacity in Diesel as well as our investment in Thanks Aaron. Next question is from Al Harvey of UBS and Al asks, ability to access Fletcher and Mason from overlying Goldfields ground at St Ives.

23:42 Let me talk about that. Fletcher and Mason, Fletcher is obviously we're continuing to drill and we're now starting to drill the Mason target within Beta Hunt. Studies are running now in terms of a haulage, what are the best haulage scenarios to get not 2 million tonnes of Beta Hunt to the surface, which we're currently doing, but 4 million tonnes. So yes, and we will focus on multiple options including basically truck haulage back out through a new and many more. Second part of that question from Al is Southern Goldfield stockpile build. Will you keep these on site at Beta Hunt or truck to Higginsville? I'll hand this to Aaron.

24:26 In short Al, that will be staying at Beta. We have the space and are doing the work at the moment and we will be able to store well over a million tonnes at Beta Hunt and leaving the dirt there gives us the most optionality considering where we're looking at building the bigger mill.

24:41 Thanks Aaron. Next question from Ganesh. Ganesh states, Wayne and team excellent execution of plan, safety record and focus is commendable. When are decisions regarding Southern Mill expected?

24:56 I'll hand that one to Aaron. Yeah, I'll take that one. So we've got integrated studies for a circa 4 million tonne mine and mill at Beta Hunt with a mill going closer to Beta Hunt at the moment. We're expecting completion of those studies in H2, later in H2. We need that information to be able to get towards decision dates. So the market will hear more about that as those studies progress.

25:23 Are additional buybacks above $50 million planned due to market price disconnect? Next question from Hugo at Goldman Sachs. You've outlined a DFS study exploring expanding the Higginsville mill to 4 million tonnes per annum or a scenario with greater optionality building a new 4 million tonne per annum mill closer to Beta Hunt. Beyond the study in March 27, can you talk us through the potential timeline on engineering and permitting through to first production and could this be upside to the FY29 500,000 ounce target?

26:15 I'll hand this over to Aaron. Yeah, thank you for that, Hugo. Look, there's a number of open questions which we will be answering through this study phase. So we've not yet guided to any timelines here and reluctant to do so until we get more clarity on exactly where the mill is going, how big it needs to be, how we're going to hoist the dirt. So a number of open questions. And once we get answers to those questions, we'll start putting our permitting timelines out.

26:43 Hugo, I'll just jump in here. There are multiple options in the Southern Goldfields for us. Obviously, expanding the thing we own, which is Higginsville, is something we could do. And the Spargo's opportunity is real, being much closer to Beta Hunt. Anyway, more on that to come. Next question from Ray. Reports show global diesel supply problems. What is the risk to West Gold operations and potential diesel supply interruptions? I might take this one, Ray. We've been well prepared for this for some time, long before the current outbreak of war in the Middle East. We really addressed a lot of these things post COVID and our onsite storage of diesel is sufficient to cover long periods of disruption. For us, Four years ago we moved away from high diesel consumption by converting three of our process plants to hybrid energy which was gas and solar.

27:37 So our exposure to diesel is much different than others who are still running processing plants on diesel. In the current business, four processing hubs. The only processing plant we run now on diesel is Higginsville and that consumes about 800,000 litres of diesel a month. Long term, Higginsville, whether we expand it or not, will be converted to hybrid energy to reduce our exposure to this energy source. Another question from Wade Christensen, what needs to happen for a new Spargos mill to be approved? Really good question Wade, we need to complete the study work on what that looks like and that study work is happening now We'll be in a position to talk more about what the opportunity is at Spargos early in the new year Another question from Ganesh. What are the likely contributions from spin-offs and or processing agreements in the coming quarter?

28:33 In the coming quarter, meaning Q2 or Q3. In terms of financial spin-offs, there are still bullet payments due from some of the counterparties that we're working with. And during last quarter, we received the first bullet payment from Sinclair, which was $5 million in cash post them hitting their first target. In terms of all processing arrangements for this quarter, I'll hand over to Aaron.

29:00 Yeah, thank you, Wayne. So look, at this stage, we're expecting more of the same from NMG, working towards that guidance number for the full year. We are also keeping a close eye on our friends at Valiant as they continue to bring the common area online. But I'm not expecting that this quarter, potentially in Q3.

29:21 Thanks for that. A question from Paul Wiggers at Bank of America. Hi Paul, the ramp up at Great Fingal has been slow versus your targeted run rate given the historic workings. Will this start to ease over the remainder of FY27? This one, absolutely in Aaron Square.

29:38 Thank you again and thank you for the question. We'll see Great Fingal continue to ramp up throughout this year towards our expecting commercial production in Q4. So continue to ramp up and short answer is yes.

29:53 Another question from Khan about Great Fingal. How are the first stopes reconciling against reserve assumptions, tons, grade and dilution? How much of the current grade reflects historic workings and when should we see a more representative stope mix? Back to Aaron.

30:10 Thank you. So we are seeing lower grades in what's been on paper for Great Fingal at the moment, mainly due to taking opportune stopes in a mining area that wasn't in the plan. Overall, the actual stopes and development in both the Great Fingal and Golden Crown zones are reconciling as expected.

30:32 There is a question here which I'll unpack from John Flutter. I think there's some confusion about what we processed and what we built. A fundamental change in our business which has not been understood in the market is this. Last year, FY26, the business changed from a position where it had too much milling capacity and not enough mine output That dynamic has changed and mines now are producing more than we can mill and that's a first world problem. Why? Because it generates stockpiles between the mine and the mill. Having those stockpiles, that buffer, in between those two units gives us the ability to keep these processing plants running during periods of disruption through weather and other issues. We saw that in Q2.

31:18 And just to jump in on that, the numbers you'll see on the slide reflecting mining and milling don't include our OPA and don't include our low-grade oxide that we feed in to optimise our blends. So the key difference there, about 230,000 tonnes, is inclusive of the oxide blending and the OPAs.

31:42 Another question from Paul Canner at Ord. Now you are mining more than you can process at Beta Hunt. Will you be grade streaming in FY27-28 ahead of any potential expansion? Back to Aaron.

31:55 Yeah, thank you, Paul. We already are doing that as much as is possible. We're doing more bulk mining at the moment. So the grade streaming optionality is limited, but it's absolutely focus of ours to make the orehead grade as high as possible and the stockpile grade as low as possible.

32:14 Grade is king here. Another question from Paul. What has driven the uplift in mining costs in the Murchison on a dollar per tonne basis quarter on quarter? Back to Aaron.

32:24 Thank you for that. This one's simple. It's open pit. So we're doing a lot of pre-strips at the moment throughout our open pit program, which is not contributing ore and they're relatively short. So it all lives in OPEX.

32:38 Another one from Paul at Ord's. On the expansion of Beta Hunt, what are the determining factors of building you a standalone mill versus expanding Higginsville? Is it purely how you decide to mine Fletcher and a material handling solution there? It's a multitude of factors, Paul. I mean, in terms of simplistically, say Aspargo's versus Higginsville decision is really about haulage distance. Higginsville is 90 kilometres away. Spargos is 30. With the scale of Beta Hunt growing so rapidly, we currently have a 2 million tonne per annum mine and we can see a 4 million tonne per annum mine emerging. The concept of hauling 4 million tonnes, 90 Ks, Thanks for watching. Thank you everyone for patching in to listen to our Q1 numbers.

33:59 We look forward to repeating this at the end of Q2. Have a great day.