Welcome to the Westgold Resources first half 26 financial results presentation. Our presenter today is Westgold Managing Director and CEO, Wayne Bramwell. Go ahead, Wayne.
Thank you, Steve, and welcome to everyone on the call. Thank you for taking the time to dial in today. With me today, I have our Chief Financial Officer, Tommy Heng. We are assuming you've all seen our report. I'm going to hand over to Tommy to run today's call, and I'll jump in at the end to talk to what's ahead before opening up the call for questions. Tommy, over to you.
Thanks, Wayne. It's fair to say that this was a record half. Before I go through the numbers, I think it's important to reflect on the journey that has brought us to this point. Our outcomes this half aren't accidental. They stem from years of disciplined effort. We worked through the tough times, stayed focused, and made deliberate long-term decisions about how and where to invest in this business. We committed early to becoming unhedged, strengthening Westgold's infrastructure, investing in drilling and development, and upgrading our equipment base. That strategy has been validated by increasingly consistent operational performance across the group. Whilst we have substantial room to improve, what we're seeing now is the direct result of executing that strategy. Progressive improvements in operational consistency, production growth, and a relentless internal focus on managing and reducing cost pressures.
Importantly, all of this work has been delivered at a time when the gold price environment is becoming increasingly favorable. As an unhedged producer, we've been fully exposed to those strong prices, giving us the ability to convert this operational momentum directly into financial returns to shareholders. Thanks to this increasing production and the realized gold prices, our revenues effectively doubled compared to this time last year, allowing us to deliver AUD 550 million in underlying treasury build, a remarkable step up from the AUD 100 million recorded in the prior corresponding period. This momentum has strengthened our balance sheet substantially, driving our closing treasury balance to AUD 654 million, compared to AUD 152 million in H1 FY 2025.
Our operating performance translated directly into earnings, with underlying EBITDA rising to AUD 612 million, up from AUD 224 million, and the underlying net profit before tax increasing to AUD 447 million, a significant uplift from AUD 89 million a year earlier. This culminated in underlying net profit after tax of AUD 314 million, more than 5 times the previous corresponding period's AUD 57 million. Overall, H1 FY 2026 marks an exceptional financial performance and demonstrates the capability of the business to generate sustained value. Slide 5. Not surprisingly, our record financial results coincide with record production results. Production from Westgold's mined ore amounted to 170,000 kilo ounces of gold for the half, at an all-in sustaining cost of AUD 2,871 per ounce.
This production is our core business, which generated AUD 570 million in net cash flow. From core business to side hustle, Westgold commenced production from ore purchased from New Murchison in September 2025. Over the half, we produced 25,000 of gold at an all-in sustaining cost of AUD 5,644 per ounce. These are comparatively low-margin ounces as we purchased this gold at a discount to the average spot price, yet this strategy has generated an additional AUD 15 million of net cash flow for the period. The key point about the OPA that is not captured in these numbers is that the OPA ore does not displace our own ore. In fact, the opposite is true.
The blending of soft oxide material from the OPA with Westgold mined hard underground ore, actually allows us to process increased volumes of our own ore, effectively increasing the throughput of our Meekatharra mill and dropping unit processing costs. Combined, Westgold's group production for the half was 195,000 kilo ounces of gold at an all-in sustaining cost of AUD 3,225 per ounce, allowing us to generate AUD 532 million of net cash flows from operations. Slide 6. This slide breaks down our P&L and the record underlying profit we were able to deliver this half. AUD 1.2 billion in revenue drove a gross profit of AUD 436 million.
Fair value appreciation in some of our liquid investments were offset by admin costs and the negative impact of fair value movements in our royalty agreements, resulting in an underlying net profit before tax of AUD 447 million. Unsurprisingly, when you're making profits, you pay taxes. Westgold's income tax expense was AUD 133 million for the half. This cumulates in an underlying profit of AUD 314 million. To reconcile to statutory profit, we need to account for one-off items, the most impactful of which is the accounting loss on the sale of the Mt Henry-Selene project. The sale hadn't completed by the end of this period, the accounting standard dictates the assets are moved to assets held for sale, resulting in a preliminary loss of AUD 178 million.
This one-off accounting loss on sale is 100% non-cash. It's important to note that the sale generated immediate real cash inflows of AUD 15 million and approximately AUD 65 million in Alicanto shares, and up to AUD 30 million in deferred considerations payable in cash or shares upon the achievement of agreed project milestones. This demonstrates our ability to generate value from non-core assets that would have otherwise remained unrealized within our portfolio. The loss results in a positive adjustments to the income tax expense to the tune of AUD 53 million, resulting in a strong statutory profit of AUD 191 million. This compares very favorably to the statutory loss of AUD 28 million for the prior corresponding period. Slide seven. Key slide for me.
AUD 550 million in underlying treasury built for the half before paying AUD 129 million for growth and exploration, AUD 76 million in stamp duty for the Karora transaction, AUD 50 million in debt repayment to end the period debt-free, AUD 29 million for dividends and share buybacks, AUD 2 million in New Murchison capital raise, Receiving AUD 26 million of cash inflows from the sale of the Lakewood Mill, and a deposit from Alicanto for the Mt Henry-Selene sale. We ended the period with AUD 521 million of cash and an impressive AUD 654 million in treasury closing balance. After paying for growth and one-off payments, our treasury still grew by AUD 290 million in the half. Slide 8. This slide shows our treasury growth over the longer period since the acquisition of Karora.
Cash is king. We're happy to see our strategy is increasing cash flows and further strengthening our balance sheet. This balance sheet strength gives us flexibility and optionality as we build momentum post our merger, with a steadfast focus on delivering our guidance and three-year outlook. Slide nine. To that end, we maintain our production and cost guidance for FY 2026. We maintain a conservative estimate of 4 third-party ore purchases going forward, as we don't control mining for this ore source. We expect to produce around AUD 365 million for the period, being the guidance midpoint at an all-in sustaining cost between AUD 2,600 and AUD 2,900, excluding the OPA. Slide ten. Let me quickly recap our three-year outlook.
We're on a clear path to grow production from 326,000 ounces in FY 2025 to 470,000 ounces by FY 2028, with the all-in sustaining costs stepping down towards circa AUD 2,500 per ounce. This is a high-confidence, executable plan built on organic growth from our existing operations, not blue-sky assumptions. The strategy is simple: mine and process higher-grade ore and optimize the mills. By investing sensibly in our mines and processing hubs, we're steadily upgrading the grade profile and matching capacity with better quality feed, lifting ore sources and margin. Importantly, we're delivering against this plan. Beta Hunt infrastructure upgrades have lifted development rates, setting up a sustainable ramp-up towards 2 million tons per annum. Great Fingall fired its first reef stope, a key milestone in the Cue Hub's high-grade transition.
Starlight continues to deliver strong, high-grade stopes, improving feed quality through Fortnum. This is real progress and exactly the trajectory our three-year outlook sets out. Slide 11. While the three-year outlook gives us a solid, high-confidence baseline, it's important to remember that it does not capture all of the upsides we're actively advancing. I won't run through everything on the slide, but let me call out a few of the material opportunities already in motion. Bluebird-South Junction. Our plan assumes 1.2 million tons per annum by FY 2028, but we're aiming to hit 1 million-1.2 million tons by early FY 2027. Higginsville Mill expansion. Feasibility work is looking beyond 2.6 million ton, with options assessed up to 4 million tons per annum. Operational improvements.
We've made significant gains that aren't baked into the base case and have the potential to drive further cost and productivity benefits. Each of these represent meaningful, tangible upside to our three-year outlook baseline, and collectively, they highlight just how much flexibility and growth optionality sits within the Westgold portfolio. Before I hand over to Wayne to wrap up, I would like to touch on shareholder returns. Westgold continues to deliver on its commitment to shareholder returns. We declared an AUD 0.03 per share final dividend for FY 2025, and while we did not declare an interim dividend for H1 FY 2026, during the half, we upgraded our dividend policy for FY 2026 to demonstrate our growing confidence in the business and commitment to delivering against that policy.
In addition, we launched a 5% on-market share buyback program, a clear signal of our belief in the value of our shares and our disciplined approach to capital management. These initiatives are underpinned by strong cash generation and a robust balance sheet, positioning us to continue rewarding shareholders while investing in growth. We paid AUD 28 million for the FY 2025 dividend during the half and commenced on the market share buyback. With that, I'll hand over to Wayne.
Thank you, Tommy. What a gorgeous set of numbers! We made some tremendous progress on our portfolio simplification goals during the half, bringing forward value from non-core and non-producing assets. After the end of the period, we completed the sale of the Mt Henry-Selene project to Alicanto Minerals for a total consideration of AUD 110 million, comprising AUD 80 million of immediate value from AUD 15 million in cash and AUD 65 million in Alicanto script, and up to AUD 30 million in deferred consideration based on specific performance criteria. This transaction was consistent with our strategy to unlock value from assets that would otherwise remain unrealized within our greater portfolio. We are also making good progress on the planned divestment of Peak Hill and Chalice, which, like Mt Henry-Selene, are assets that sit outside of our three-year plan.
We are demerging our non-core Reedy and Comet assets in the Murchison into a new, soon-to-be-listed company called Valiant Gold. Like the assets on the previous slide, Reedy and Comet are assets that, for Westgold, have value but are under scale and don't feature in our longer-term plans. What makes this different is that their proximity to each other and to our processing hubs lend themselves to become a great value generator under a smaller, focused management team, where these assets are their top priority. The prospectus for Valiant was released last week, describing the AUD 65 million-AUD 75 million IPO, with an AUD 20 million priority offer for eligible Westgold shareholders. Following the raise, Westgold will retain a 44%-48% cornerstone equity position in Valiant.
As part of the transaction, we are entering into an OPA with Valiant, providing them with a fast-track pathway to cash flow. I think of this as an analog to the deal we've recently done with New Murchison Gold. If you would like more information on the Valiant IPO, I encourage you to obtain a copy of the prospectus from the Valiant Gold website. Okay, final slide from me. This is a great set of results, and I'm incredibly proud of what the team has delivered. Our strategy is working, and the early outcomes are clear. We're not in celebration mode here. There is still plenty of work ahead of us.
Our focus remains exactly where it needs to be: on safety, on delivering our full-year guidance, and on executing the 3-year outlook, which sets the minimum bar for what this business can and should achieve as we continue to lift performance. With that, let's move straight to questions.
Okay, your first question, team, comes from Adam Baker. "What is the reasoning behind not paying a dividend for H1 FY 2026, noting minimum dividend policy of AUD 0.02 per year and a maximum of 30% of free cash flow?" One for you, Tommy.
Thank you. Thank you, Adam, for the questions. Our reason for reasoning is we would like to pay a fully franked dividend. Such as the timing of when our tax returns are lodged, the franking credits will only materialize circa in the second half. Hence, that's why we want to pay a fully franked dividend, and stay tuned.
Okay, next question comes from Hugo. "Should we still expect Fletcher Reserve and resource updates in the coming months, Wayne?
Thanks, Hugo. Certainly, we're continuing to drill Fletcher. I would expect a resource uplift this year, a small reserve conversion. We're basically doing both. We're doing infill and extensional. That'll feed into resource and reserve updates.
Next question, also from Hugo: "Can you provide some color on the timing of integrating recent ore purchase agreements and the impacts to FY26 production and cost guidance?
Thanks again, Hugo. Certainly, the NMG ore purchase agreement was factored into our FY 2026 guidance. Going forward, 2027, 2028, none of the other ore purchase agreements that we have in place, for instance, with Valiant, have been factored in.
Next question comes from Kevin. "How far above nameplate could you run Higginsville Mill, given the blending of soft Forrestania resource ore?
Thanks, Kevin. Even with us feeding our own sort of softer oxide from Lake Cowan late last year, I mean, on face value, that Higginsville Mill has a 1.6 million ton per annum throughput. There were days where there was a high blend of soft in it, doing 1.7, 1.75. We'd expect to see similar numbers with Forrestania.
Just bear with us while we go through some other questions. Just a minute. Next question comes from Ganesh. "When does the mill expansion at Higginsville proceed? What is the grams per tonne from Beta Hunt and Great Fingall you are targeting?
Thanks for that, Ganesh. Expansion of Higginsville, the proposal to do that is with the board now. Your second question is.
grams per tonne at Beta Hunt.
We use in our mine plan for Beta Hunt is circa 2.4 grams. It often does better than that, we forecast and schedule Beta Hunt conservatively. The same is true with Great Fingall. We at steady run rate, Great Fingall, we schedule at 4 grams, our expectation is in that ore body, with high components of gravity gold, we'd see numbers much higher than 4.
Next question comes from Paul. Hi, Wayne and team. You moved a few deposits from exploration into development, including Larkin and A Zone. How quickly could you bring these into development?
Good question. We are actually mining in the A Zone, currently, Beta Hunt, we mine A Zone in the western flanks, we do actually have stopes in Larkin. Really, what we see is the opportunities in terms of scale at Beta Hunt, western flanks, A Zone, Fletcher, Mason, Larkin. These are all things which we're either drilling or actually mining from. Yeah, Beta Hunt, much bigger system than we would expect.
Another question from Paul: "With the ore purchases, why have you not upgraded guidance?" For you, Wayne.
I think I answered that one. The existing FY 2026 guidance has already got the NMG ore purchases baked in, but until Valiant actually starts to deliver, we'll be conservative. We won't build any of that in until Valiant starts to produce.
We have no further questions at this time. I think, I'll give it to you, Wayne, to close off.
Look, thanks, everyone, for patching in today. I think the main issue, Tommy explained well, was that in terms of why no half-year dividend, really, it's the fact that we're in the process of building our franking credits. From an investor's perspective, and I'm one as well, I much prefer fully franked dividends than unfranked, and that's really the focus going out to the full year.