Depending on which side of the globe you're on for today's presentation, I'm joined by Wayne Bramwell, CEO of Westgold Resources, to Discuss Recent News and Update the Market on all things Westgold. Wayne, how are you this morning?
Fantastic, Romeo. Thanks for the opportunity.
Awesome. For the folks in the room, here's how today is going to work. I've got a number of questions for Wayne just to discuss recent news. Today is an interactive event, so please do feel free to ask questions for Wayne during today's chat. There's a chat button on the bottom right-hand of your screen. You can click it at any time and enter your questions. If for whatever reason we don't get to your question today, we run out of time, it's only a half-hour slot for today's discussion, or for any other reason it's off-topic, I'll make sure the Westgold team gets your question and can get back to you. They'll also have your email and phone number, so they'll be able to get back to you at their leisure. The only other thing I'll say is today's event is being recorded.
We'll be available probably before tomorrow morning, Perth time, and probably by midday Eastern time. It'll pop right in your inbox. It'll also be available on 6's YouTube channel and right at this link that you're currently watching it on. Let's jump right into the protein, Wayne, if you don't mind. I know there's been a lot of positive news flow lately with the record Q4 results and the fiscal year 2026 guidance. I'd love if you could just quickly walk us through all the key developments since that Q3 fiscal year 2025 quarterly results and what should investors be looking for?
Look, there's a lot to like about how Westgold Resources is tracking at the moment, Romeo. I mean, our June quarter results showed, gave people a glimpse of the momentum the business has got and its trajectory. In that quarter, we had a record production of 88,000 oz, which shows people what this business can do when our mines start to deliver. Now, for a full year, ending June 30, the business delivered 326,000 oz, again, over 112,000 oz higher than the previous year. We're very much now, after 12 months of integrating the ex-Karora Southern Goldfields assets, starting to feel like the business is at an inflection point. There's a lot to like. That plus what we're doing with the drill bit. I mean, we released the main resource for the Fletcher zone at Beta Hunt, which literally, you know, it was double our expectation.
There's a lot to like about this business. A lot of it is both value being created by the drill bit and starting to see glimpses of what the business can do when these assets fire.
Great. I know this morning you released full-year results. I'm curious, what should investors be excited about and looking for as they read through those?
Look, again, FY 2025 results in some sense were always going to be tough because of the costs associated with the merger. No buyer's remorse whatsoever from the Karora assets. The Beta Hunt mine is a fantastic, it's already a multi-decade mine. It will continue to be a multi-decade mine, and it's getting bigger, and it's getting better. We knew in the previous 12 months we'd have to invest significant capital in upgrading the mine capital. Happy to say all of that's behind us now. Even more pleasing is the Higginsville package, which we acquired in the merger. I mean, the little Two Boys mine has made money for us every month since acquisition. We're mining open pits in the Higginsville area now, and we're starting to see consistent increases in throughput, grade, and recovery at the Higginsville mill.
Overall, our Southern Goldfields business now is a really efficient business and getting more efficient, and that efficiency is driving higher mine output and cash flows. In the north, the Murchison , again, is probably a little bit further behind than where we'd like it to be. We've spoken to that in some detail about the slow ramp-up of South Junction at our Meekatharra mine. Overall, the business, for those who watch it quite closely, very much June was a record month. The June quarter was a record month, and that should give people confidence that the plan that we've set out is achievable.
Awesome. Now, I know that you mentioned that the multi-year outlook is expected in September following that 2025 mineral resource and ore reserve update. I'm curious if you could share your strategic vision for where you see Westgold positioned in, let's say, three to five years, particularly given that stated goal of becoming a leading Australian gold company.
very much. Look, we're driven now by the purpose, and the purpose is very clear: to become a leading Australian gold producer. I mean, we can see big opportunity within the portfolio of assets we've got. We're guiding the market towards a midpoint around 370,000 oz, 380,000 oz for this current FY 2026 financial year. That's a very conservative view of what we think it can do. In the three to five-year plan, which we'll roll out early in September, without giving the game away, the investors will see what that three to five-year outlook looks like. I can assure you there's been a lot of work that's sat behind that. This business has the ability to generate a lot more gold at a lower cost and generate a lot more free cash. The investment from FY 2025, some of those things now are starting to pay dividends.
Great. Now, I do know that you initiated a divestment program for the smaller assets like Comet, Paddy’s Flat, and others to focus on those higher-grade operations. I'm kind of getting in your head, how do you balance the immediate cash flow benefits these assets provide against the kind of strategic value of simplifying your operations?
In some sense, Romeo, it's a well-trodden path. We're trying to up-tier our asset portfolio now. Where we've got a range of smaller underground mines or smaller assets, which we just don't think will have scale, all those mines are at higher-cost producers. This is absolutely the time now to basically divest or joint venture some of these smaller assets out to other people. How do we balance our approach to capital? It's really return on investment with a view of, OK, this $1 in this asset, can this generate $1.50 of return? If it can only generate $1.10 worth of return, then obviously that asset starts to move down our list of priorities. A key point about this whole divestment program is, I mean, the portfolio we've got now, 3,200 sq km of Western Australia, we've got three underground mines on care and maintenance.
Two of those would effectively be project starters or would be cornerstone assets in a much smaller gold company. We have the ability now to joint venture or divest some of these things, which will start bringing new producers into the Australian market. If we can assist an explorer who wants to become a producer by handing them or divesting them an underground mine and also giving them a milling solution, that's good for both groups of shareholders. Case in point, you know, for those new to the Westgold story, we did a very, what I think is a pretty clever commercial deal with an ASX company called New Murchison. Really good explorers. We gave them the opportunity to get access to our processing infrastructure at Meekatharra. Literally, that Crown Prince mine, they're mining high-grade there now. First ore from Crown Prince to Meekatharra will be in the next quarter.
For them, as a small company, all they've had to focus on is mine development. They haven't had to go down a path of trying to develop a new mine, a new camp, and a new processing facility, which the level of complexity with that and the time to approval is very long. I think the opportunity around some of the divestments that we've got, potential divestments in the pipeline, is to provide a better pathway to production for others of which the ore is most likely going to come back to one of our processing facilities. To me, that's a win-win scenario for two groups of people. We've got sunk capital, our processing plants. We've got four large processing plants.
If we can have a different stream of ore coming to those mills mined by other people to supplement the ore that we mine, I think that's all about lifting the grade to these mills and lowering our costs. This divestment and joint venture concept is very live, and it's all about trying to up-tier the package. What we really want is larger processing plants and larger mines. We have a multitude of sort of mid-scale mines. If they don't quite fit our metric, those ones, and someone else can do them more competitively, great. Happy to help them out to do that, particularly if we bake in ore purchase agreements where the ore comes back to our sunk capital.
Great. No, it makes sense to me. I got a technical question here. I know the transition from transverse to longitudinal open stoping at Bluebird South Junction represents a pretty significant technical shift. Just looking at your view on if you could elaborate on what drove the decision beyond ground conditions and how the experience might influence mining approaches at your other underground operations.
Yeah, it's a really good question. In our Murchison business, the Bluebird South Junction mine is pretty much now the engine room of the Murchison. This mine is something which we still don't know how big it is. We keep drilling it, and it keeps getting bigger. Case in point, when we started this mine as an underground operation, it was producing around 250,000 tons per annum, a pretty simple longitudinal open stoping operation from what we called Bluebird. We kept drilling this thing. Bluebird, the side of the mine, kept getting bigger. We got it to 500,000 tons per annum. We started to drill, and we started to infill the South Junction side.
Think about this mine as having two legs, the Bluebird side, sort of a narrower, higher-grade zone, and South Junction side, much wider stopes up to 30 m wide, still lower grade, but sort of around 3 g. Think about Bluebird as 4 m- 5 m, South Junction 3 m- 4 m. The issue we've got with this mine, we keep drilling, and it just keeps getting laterally bigger, and it's open at depth. The transition in the mining method, the mining method we used in the narrow side of the mine, narrow, 6 m- 7 m in the Bluebird side, was probably not the right approach for the South Junction side. What we can see is that the base load from this mine long-term or in the immediate term will come from South Junction.
The change to mining method there is really about ensuring certainty about that tonnage and trying to knock out some of these variations which our previous mining method was giving us. Bluebird South Junction currently, two mining fronts. There's a third mining front which we've been drilling called Polar Star, which again, this Polar Star lode, and this is a set of stacked lodes, still don't know how big it is. The real risk in these businesses is, and we've done it, we've been guilty of this, we've rushed into ore bodies too quickly without enough drilling. In an underground mine, you put in your capital infrastructure where you think it should go, you keep drilling, and then you go back and go, maybe should have put this infrastructure in a different place. Bluebird South Junction, so critical to the business.
We're continuing to drill South Junction and Polar Star, but this thing, next stop, 1 million tons- 1.2 million tons per annum of output. What we want is consistent output. That's been a criticism of Westgold Resources in the past. Our mine outputs have been quite erratic, and a lot of that is directly driven by not having enough drilling into them or trying to execute too quickly. In Bluebird South Junction now, the level of drilling is accelerating. Our outputs are now steadily creeping up to be sustainable, not these erratic things, which trying to manage a business like this with an erratic mine output directly knocks onto erratic financial output. That's what we're trying to do. We're trying to become a more consistent producer around fewer, bigger mines and much larger processing plants. That's really the key.
A simpler business with less moving parts centered around big underground operations, Beta Hunt, Bluebird South Junction, Big Bell, Starlight, supported by sort of medium-scale, high-grade mines, things like Great Fingal, which we'll talk about when the market will see more from Great Fingal over the next few quarters. Simplistically, that's the business. We've got currently four processing plants, six underground mines running with a seventh to start. What we'd like is fewer, larger underground mines which generate more output at a lower cost. That underpins a business generating much higher margin.
Great. I do know that despite record production, my understanding is you missed the lower end of the FY 2025 guidance due to trucking issues at Beta Hunt and some development delays. What operational improvements are you implementing to ensure that more consistent delivery against guidance going forward?
Look, you're right. We missed the bottom end of our guidance by about 1%. A lot of that was driven by the fact we had to stand down our trucking fleet at Beta Hunt late in the quarter. The underground trucking fleet there was much older than the equipment that we were running in the north. This equipment, I won't name their supplier or the brand, let us down significantly in the last quarter. We were so close to this bottom end of our guidance. A 1% miss is still a miss. What have we done? That older trucking fleet now has been parked up for probably about six weeks. Now that underground fleet is being replaced with newer, more efficient equipment so we can have more certainty about the sustainability of our haulage outputs from that mine. That really hurt us.
When we think about a trucking fleet in this mine, the trucking fleet in Beta Hunt is 10 to 11 trucks. It was constrained during the last quarter where I think the most we could run was maybe six to eight on some days, either due to reliability of the equipment or ventilation. Ventilation in these mines, certainly at Beta, has held back its productivity. Happy to say now both the trucking fleet is replaced and the issues around ventilation now are being removed. We're feeling we're seeing good performance out of Beta Hunt. It needs to be steadily increasing, not this sawtooth graph which knocks onto our financial results.
Great. Good to hear. I know with $270 million in non-sustaining CapEx planned for FY 2026, but a strong balance sheet of $364 million in cash and investments, how are you looking at capital allocation between growth acquisitions and returning capital to shareholders?
A great question, actually. I mean, in terms on the capital side, we have effectively got two development projects in the business. Our Great Fingal mine at Daydawn at Q is just about to start production. It won't get to commercial production until the new year, but we are effectively handing this high-grade mine off to a contractor, Barminco, which they're on site now and will start in earnest in September. There's still capital to spend on Great Fingal to get it to steady state, and steady state will be in sort of calendar 2026. The other big capital project is still Bluebird South Junction. This mine, as I said, keeps getting bigger. The South Junction side has required more capital development, an improvement or increase in ventilation, and that's where the capital is going.
Back to your question about how do we think about capital in the business or really around, you know, all of these assets compete for capital. The good thing is Westgold Resources has the free cash flow to fund these things. I mean, ideally, two development projects at the same time is not ideal. Fortunately for us, Great Fingal is further ahead than Bluebird South Junction. It sort of moves off. You know, the risk around execution there will diminish as Barminco starts to ramp that up in the second half. In terms of M&A, we're very much on the other side of that. We call it M, A, and D. We're in the divestment phase. We're 12 months on post the merger of Karora . As I said, no buyer's remorse at all. The Karora assets were fantastic, and we're starting to show the market.
The market is starting to get a glimpse of just how good and how big Beta can be. The next 12 months for us is about let's tidy up the portfolio. The portfolio is big. Some of these smaller targets, like I said, we've got three underground mines on care and maintenance. They're sitting there, and they cost us, you know, standing still costs money. If one of those mines can be handed off to a third party and they want to start mining, and that ore comes to us without our management sitting on top of it, that's a model that I really like. We're already running that model with New Murchison, and it's a model I think we can deploy elsewhere across the portfolio. Next 12 months, divestment is the key.
You know, the business in many instances or many areas, hopefully what people are starting to see is an evolution in our operating model, that our outputs should become more consistent as we're starting to mine these ore bodies better, but also as our approach to capital and capital returns. I'm really happy today that the board signed off on a $0.03 per share dividend, which was, you know, with the year that we had, which was a transformational year, that was a significant uplift in our dividends. More importantly, also the board, in a signal that they are confident about the plan, approved a share buyback, which for North American investors, you know, that's a very important signal about how we're thinking about the business. Dividend and share buybacks appeal to two different investors. Australian investors very much like the dividends.
North Americans very much resonate more when we speak to share buybacks. The business now has evolved to a point where we can consider both options.
Great. I do want to talk about ASIC for a second because I know your guidance of $2,600 to $2,900 per ounce for FY 2026 obviously reflects the current cost environment. How is Westgold generally managing inflation pressures across labor, energy, consumables?
Look, it's a great question. For people not sitting in Australia now, that $2,600 to $2,900 Australian an ounce, certainly every Australian gold producer who are our peers are seeing their all-in sustaining costs lift. Cost of labor here is still high. It's probably more plentiful, but the cost of labor post-COVID certainly hasn't dropped. A lot of the Aussie businesses, maybe, I don't know, most of our Australian peers run a business model which we call hub and spoke, the processing plant being the hub, multiple mines as spokes feeding these hubs. We've got four hubs, and we've got multiple spokes. One of the key points is that haulage cost from a remote mine back to the hub is one of the places we've seen the highest inflation in our business.
Case in point, we are hauling within the Murchison, we are hauling ore from our Cue operations back to our Meekatharra operations. That's a haulage distance of 120 km. It's not the longest haul in Australia. Some people are hauling over 200 km, but this is one of the functions which is driving our cost base up. How do we fix it? We have bigger hubs and shorter spokes. When we get to the point soon, and this is what Bluebird South Junction is about, Bluebird South Junction over the next 12 months will get to a point where it can feed the Meekatharra hub. It can underpin that production. Bluebird South Junction is about 600 m from the processing plant. Because that mine has been slow in its ramp-up, we've had to haul ore from Cue back to Meekatharra.
120 km, an expensive haul, that's what's been driving our costs up. What investors can start to expect is as the grade starts to come up in our processing plants, our outputs will increase. As our mine outputs lift, we are less reliant on tramming or trucking or long distances. Once for you, it'll be evident in our costs once our costs start to fall that this component of haulage in our business is starting to shrink. Romeo, that's been something which has hurt a lot of the Australian producers who run this hub and spoke model, because haulage often is not a component which we manage. We don't own our own trucks for road haulage. It's a third-party supplier.