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Mar 2018 - Westgold Res Ltd

Westgold Resources Limited (WGX) 
Joining the >300kozpa/ >$1bn Market Cap Club

  • Westgold is an Australian gold producer that expects to produce almost 300kozpa in the current FY to June 2018, from 4 gold production hubs in WA, namely : Meekatharra (MGO), Cue (CGO), Fortnum Project (FGP), and Higginsville (HGO). Each hub contains a central ~1mt to 1.8mtpa plant from which ore is trucked from up to 4 almost wholly owned historical goldfields within an ideal radius of up to ~50km. ERA's view is that each hub has a target of potentially achieving >75kozpa for >10 years, with some hubs initially producing more (eg MGO up to ~170kozpa), and others less.
  • Australian gold companies that produced ~300koz at AISC<$1200/oz in FY 2017 mostly have a market cap of >$1bn, while those that produced >500koz in FY 2017 have a market cap of >$3bn. Westgold produced ~135koz in DH2017 and had forecast production of ~300koz, now slightly less due to the sale of SKO. However, based on ERA estimates WGX’s gold production could exceed 300kozpa from FY2019, with WGX’s market cap at only ~$540m.
  • WGX's focus is increasingly on underground mining, below the existing workings in its goldfields either: historically mined underground (~1890 to 1940) or more recent open-cuts (~1990 to 2010). Operations that achieved development in DH2017 were Prohibition at MGO's Paddy's Flat, and Twilight/Starlight at Fortnum (FGP); preparing to start stoping. At Paddy's Flat, new ultra high grade low-angled thrusts were discovered (opposite to the perceived main mineralised ore shoot direction) with grades up to ~435g/t over 4m or very fine pin-head, almost dusty, visible gold @ >1200g/t in quartz when viewed in drill core.
  • Each of WGX's 4 operations has a base mine (as or within a goldfield) with an ideal life of >10 years, plus subsidiary gold mines in nearby goldfields. Such as CGO's Big Bell in (its own goldfield) expected to be ~1mtpa @ >3g/t from ~FY2020, with subsidiaries such as : Comet (Tuckabianna), and Great Fingall (Day Dawn). Other likely “base mines” are Paddy's Flat at MGO, Mt Henry at HGO, and Fortnum at FGP.
  • Westgold has a substantial pipeline of prospects jostling to come into production such as >70 just in the original CMGP (MGO & CGO). There are even a number overlooked in the "shadow of the headframe", so close that the operating plant can be heard such as possibly Erin/Vine and the palaeochannels at Higginsville (HGO), or even the number of mines in the vicinity of Day Dawn’s Great Fingall (CGO); plus DQ2017s encouraging new exploration results at MGO’s Aladdin of 40m @ 8.5g/t from 4m and 29m @ 6.1g/t from 35m.
  • Written by: Keith Goode
  • Tuesday, 20 March 2018