Westgold Resources Limited [ASX: WGX, Westgold or the Company] is one of Australia’s top five gold companies and is ranked in the ASX200. The Company is the dominant explorer, developer, and gold mining operator in the Murchison and Southern Goldfields regions of WA with tenure of more than 3,200 square kilometres. The Company owns and operates its six underground mines and its modern underground mining fleet that provides greater cost control and operating flexibility. The Company’s five processing plants have an installed processing capacity of 7 million tonnes per annum.

Bluebird-South Junction mining complex set for Mineral Resource upgrade

Ongoing resource development drilling at Westgold’s Bluebird-South Junction mining complex is showing significant intersections as the site rapidly becomes Westgold’s growth engine in the near-term.

Two surface drill rigs and two underground drill rigs have recently made significant intersections including a drill intercept of 13.7m at 18.02 grams per tonne of gold from 863 metres from the Polar Star Lode. This is a stand-out gold intercept and with other high-quality intersections suggest that the Bluebird-South Junction mining complex will be expanded, and the existing Inferred Resource quantity will be upgraded to Indicated Mineral Resource.

The Company has already indicated that an updated Mineral Resource upgrade for this mine site is pending for later in November. Shareholders can expect this upgrade will be significant. The likelihood is that much of the existing Inferred Resource quantity will be upgraded to an Indicated Resource, which will have the likely effect of extending the mine life of the Bluebird complex and justify a processing capacity upgrade to boost annual production volumes beyond 1.2 million tonnes per annum.

This system historically has produced more than one million ounces of gold from open pits and so the production prospects of being mined from underground by Westgold are highly favourable. The Mineral Resource upgrade announcement this month should maintain the recent share price strength of this growth-focused gold producer.

Transitioning to a larger business

Westgold has guided the market to 400,000 to 420,000 ounces of gold production in FY25, with production volume higher in the second half -year. An increase in the processing capacity at the Bluebird-South Junction mining complex may see FY26 production approaching 500,000 ounces per annum.

All-in Sustainable Cost (AISC) of production has been estimated at between $2000 and $2,300 per ounce for the 2025 financial year. The $1.4 B merger with Karora Resources which took effect from 1 August 2024 should generate operational synergies that are likely to reduce the AISC of production to the lower end of this guidance range.

The combination of a pending Mineral Resource upgrade, a rising production profile and ongoing disciplined cost management should support continued shareholder value accretion over the medium term.tly generates about 88 percent of revenue from the US, leaving substantial runway for the international rollout of its subscription-based location service offering. This is in addition to advertising revenue as Life360 sells product adjacencies like car insurance and travel insurance to users of its tracking devices. The advertising revenue initial infrastructure is already in place for this future revenue stream.
The Company is cash flow positive, with net cash from operating activities of US$13.9 million for the 6 months to June 2024.

Cash at 30 June 2024 was US$162 million, which includes US$93 million net proceeds from a capital raising during the six months period to June 2024.

The Company has stated the existing cash balance and cash provided by sales of subscriptions and hardware devices will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. This means that existing shareholders are unlikely to be diluted by an equity capital raising in the year ahead.

The proven location-based service offering makes future adjacent safety, connection, and location features available at a very low cost per additional user, creating operating leverage that increases gross margins. This combined with Life360’s capital-light business model, driven by recurring revenue, enhances sustainable cash flow generation.

As a Founder-led business with a large global roll out opportunity ahead, and a scalable business model driven by recurring revenue, investors can justifiably anticipate shareholder value accretion over the medium term.