GOLD WRAP: Rain fallout for Gold Road; enlarged Red 5’s consolidated output above 450,000 ounces; and Westgold prepares for Karora.
Rain impact at Gold Road Resources and Gold Fields’ Gruyere mine resulted in a revision of guidance for the project across 2024, after the project was unable to operate for much of April.
Gruyere’s cost of production was hit by the inclement weather, which shut off the Great Central Road for seven weeks to the end of April and impacted its supply lines.
Gruyere produced at an all-in sustaining cost of $2,441 per ounce last quarter, up from $2,194/oz in the March quarter – though one-off costs associated with the train and reestablishment were reported outside of AISC.
The weather ultimately cost the JV $11.3 million with some chance of recovery through insurance, according to Gold Road.
Gruyere hit record rates of mining and plant throughput in May following the disruption, leading to production of 62,535 ounces from the project for the quarter – a slight reduction from 64,323oz produced in the March quarter.
Gold Road’s guidance on the project for the calendar year was revised, to 290,000-305,000oz at an AISC of $2,050-$2,200/oz.
Its previous target was 300,000-335,000oz at $1,900-$2,050/oz.
Gold Road continued to push ahead with the development of its 100% owned Yamarna assets, with native title and extensional exploration activity underway.
The company ended the quarter with cash and equivalents of $86 million, down from $146.2 million the previous quarter, after it took up a $50.8 million investment in De Grey Mining through an entitlement offer and paid $22.6 million in one-off tax.
Gold Road’s listed investments held a market value of $478.4 million on June 30.
Its shares fell 5.8 per cent this morning.
Red 5 flicks the switch
Fresh off its merger with Silver Lake Resources, Red 5 posted an impressive set of consolidated production figures – churning out more than 450,000 ounces across its portfolio last financial year.
The newly consolidated gold miner produced 453,519oz and 1,067 tonnes of copper, achieving an average sales price of $2,932 per ounce across its assets.
All-in sustaining costs of production varied across the asset book, with the Deflector mine the lowest, producing a record 138,693oz last financial year at $1,626/oz.
The Mount Monger mine produced 98,788oz at $2,176/oz.
At 210,940oz, the King of the Hills project was the biggest contributor of ounces last financial year at an average AISC of $2,043/oz.
The company’s recently restructured hedge book will one to watch. Red 5 has 291,188oz of gold forward hedged over the next 27 months, at an average forward price of $2,769/oz.
The local gold spot has hit highs above $3,500oz this year.
Red 5 finished the financial year with cash and bullion of $453.7 million, with $92.9 million in debt subsequently paid down to zero.
The company expects to release guidance for the new financial year with its financial results release in August.
Red 5 shares were 3.3 per cent higher at 10am.
Westgold-Karora deal imminent
Westgold Resources expects its deal for Karora to be done tomorrow, in a move which it expects will take its annual production beyond 400,000 ounces of unhedged gold.
The Karora transaction loomed large over the company’s quarterly results call today, and will build on the momentum of a solid financial year, where the company delivered to the top end of adjusted production guidance and the bottom end of cost guidance.
Westgold produced 227,237oz at an all-in sustaining cost of $2,164 per ounce last financial year.
The figure was short of the company’s initial FY guidance of 245,000-260,000oz, which was revised downward to 220,000-230,000oz in April after a decision was taken to pause mining at the struggling Paddy’s Flat project near Meekatharra.
Westgold’s move at Paddy’s Flat was described as “prudent” by managing director Wayne Bramwell, who said it highlighted the company’s willingness to prioritise cashflow and profitability above production targets.
Westgold completed its sixth consecutive quarter of cash building, with $263 million on hand at the end of June, and declared a final dividend of 1.25c per share.
Mr Bramwell said the Karora transaction would make the enlarged company, dubbed Westgold 3.0, a different value proposition all together.
“At the end of the quarter, in some sense, we close the book on the second generation of Westgold – Westgold 2.0,” he said.
“Merged with the Karora team and assets, we become the next plus-400,000 ounce Australian gold producer, a much larger, well-funded, unhedged company with a plethora of fantastic growth options and enviable exploration upside.”
The original Westgold merged with Metals X in 2012. In 2016, Metals X spun out its gold assets into a new entity also called Westgold - considered informally by the company to be Westgold 2.0.
Westgold shares were down 1.2 per cent to $2.51 in early trade this morning.
